Kickstarter Conundrum: Money Changes Everything... But What If It Doesn't Let You Change Enough?

Let me start out by saying that I'm a huge fan of what Kickstarter has put in place. They've more or less built up a simple and easy to use platform to allow all kinds of creative folks a way to "fan fund" a variety of projects (music, books, software, performance art, movies, etc...) by using a "tiered" support model. If you're not familiar with the site, it lets people setup a project with a funding "goal" and a deadline. Then, they can set up a series of tiers for how people can fund the project, with promises to get back certain things in response to those tiers. This is the model we've spoken about a few times in the past -- such as what Jill Sobule did a couple years ago to fund her album.

While I definitely believe this sort of model can make a lot of sense in certain areas, I don't think it's right for everyone, and it certainly can create some potential problems -- especially if the content creator doesn't live up to expectations. Kickstarter got a lot of publicity back in May when one of its projects, called Diaspora, for a "distributed" social network got covered in the NY Times at the same time as there was a lot of fuss about privacy concerns on Facebook. That resulted in the project -- which had only been seeking $10,000 to let four college kids work on this project over the summer -- raising over $100,000.

Now, many have looked at this as showing off the power of Kickstarter (though, others might argue it really showed off the power of the NY Times). However, Clay Shirky pointed us to a critique of the Diaspora/Kickstarter "success" that points out that it could actually end up being bad for both Kickstarter and Diaspora:

It is kinda alarming as this pressure to deliver something by the end of the summer something so complex is not necessarily going to help them. The open source community have been trying to develop peer to peer web solutions for ages. There are many reasons why we have not seen a strong distributed social web yet. Some of these reasons are technical, other are social, it's not impossible, but also not trivial.

It is not unlikely that Diaspora would fail to deliver on it's promised milestone by the end of the summer. This should not be a big deal for an Open Source project with developers scratching their own itch. But in this case, the Facebook users frustration, Diaspora's media attention and the actual $$$,$$$ make this an itch shared by many many more users and only 4 students are given the scratcher.

To some extent, I also wonder if the research Daniel Pink talks about in Drive can also come into play. By adding more money to the mix, it may actually make it more difficult for the developers to build something as good as they might have otherwise. Now they have so many more expectations and so much more attention that it makes it that much more difficult to live up to expectations, even if they actually can achieve what they initially set out to achieve.

The other thing that might make this tricky is the same point I've made a bunch of times about the difference between ideas and execution. One of the things you quickly learn at a startup is that the initial idea is meaningless. Once you get to work on executing, that idea will change daily (if not more often). You may have a general idea, but reality gets in the way, and you adjust and adjust and adjust. Often, what comes out in the end is entirely different than what you set out to do, but that might not be a problem. It's quite rare for a project to set out towards a specific point and end up at that point.

For most startups, there's flexibility there. As the execution happens, they can shift course along the way. But in a situation like this, where thousands of people have donated with specific expectations, changing course is difficult, if not impossible, even if it turns out to be the most important thing for the project itself. If they do change course along the way, for the good of the project, suddenly people may get upset about a sort of "bait-and-switch." This doesn't mean that I don't like the Kickstarter model in general. But I can see where it could cause trouble in certain situations. For things like an album, where the deliverables are clear and understandable, it can work fine. But for a software development project, it could be a lot more complex, and there can be some serious pitfalls. Combine that with having a project massively overfunded, and it could lead to trouble.
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Social Enterprise: 'Diaspora' Crowdsources $200,000

Diaspora, the pro-privacy social network and social enterprise being built as an alternative to Facebook by four NYU classmates, announced today that it has been able to crowdsource its goal of $200,000 in first-round funding via Kickstarter.

The group, which announced its project April 24 amid Facebook's privacy brouhaha, gave itself 39 days to raise $10,000 using the online fundraising site. The group reached its $10,000 goal in 12 days, and today, the group announced it was able to raise all of the money it sought -- some $200,000, plus an additional $642, from 6,479 people (including Facebook CEO Mark Zuckerberg).

[Diaspora software aims to let users set up their own personal servers, called seeds, so users can control who-sees-what about their private data. Diaspora will provide the same functionality as Facebook, the group says, but it won't rely on centralized servers.]

According to Max Salzberg, 22, one of the four co-founders, the group began its work on the project in April, after hearing Eben Moglen, a Columbia University law professor, describe social networks as a form of "(corporate) spying for free." In recent weeks, Diaspora has become a buzz magnet, receiving mainstream media coverage and attracting nearly 29,000 followers on Twitter. [See fellow blogger Audrey Watter's recent piece on Diaspora here.]

The news is significant for the social enterprise sector, in that it proves that it's possible raise startup capital online for popular projects. Diaspora isn't the only "un-Facebook" social network that is being developed amid privacy concerns. Appleseed and OneSocialWeb also have been working on alternatives.

What do you think? Is crowdsourcing a realistic alternative for new social startups? Let us hear from you.
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The Diaspora Project and Kickstarter: The Power of (Micro)Funding a Good Idea

$162,376 pledged on kickstarter.com for the Diaspora Project with a goal of $10,000
a massive response! (as of Saturday 15th May 2010.

Since we broke the story about the Diaspora Project last week, the plans for an open source, distributed alternative to Facebook has seen widespread press. But just as importantly, funding for the undertaking has skyrocketed.

The Diaspora Project is the brainchild of four NYU computer students, and as Sarah Perez noted in her article, while the concepts of "open source" and "distributed network" might not normally have mass appeal, the latest round of privacy concerns with Facebook have helped to generate a lot of attention for the project and the concepts behind it.

The project is currently being hosted on Kickstarter, a site that lets entrepreneurs crowdsource funding. Kickstarter allows entrepreneurs to set a funding goal and deadline, as well as offer an optional set of rewards to their backers. Projects that don't reach that goal have their pledges returned.

In Kickstarter's words, the service demonstrates that "good idea, communicated well, can spread fast and wide" and that "a large group of people can be a tremendous source of money and encouragement."

Last week, Diaspora was $2000 short of their $10,000 goal with under a month left to go until reaching their deadline. Yesterday, when Techcrunch wrote about the project, funding stood at around $60,000. As of this morning, they have raised over $90,000 from over 2100 backers, including some fairly big names in the tech industry, and still have 19 days of fundraising to go.

Kickstarter offers a sliding scale, of sorts, for donations, and most of the funding for the Diaspora Project has come in small amounts. While 4 backers have pledged over $2000, most backers have opted to donate $5, $10, or $25. The latter has been the most popular donation amount, with almost 900 individuals committing $25. That $25 will get you a CD, some stickers, and a t-shirt - and the satisfaction of helping support a Facebook alternative.

While certainly the Diaspora Project is well-timed, their use of the Kickstarter platform also points to the power of crowdsourced microfunding - particularly for a project that many people outside typical investment circles are finding compelling and important.
Kickstarter.com The Diaspora Project
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