How will the Doom Kickstarter fraud scandal affect future Kickstarters?

[jasper]

Out the 7 projects I backed that were successfully funded. 3 of shipping dates have not arrived but the two creators have maintain a frequent update schedule.
2 of the projects shipped a month to month and half late. The month and half late project had only fair updates until the project return from the manufacturer.
One is 9 months late and had lawyer issues and bad communication. So bad when I posted I thought the project was not going to happen: the creator got fired up to post more. And he later quoted me in an update.
Then there is Steve Jackson Ogre Designer edition, which very late but almost a hundred updates have been posted. And updates explain the troubles the company has been happening.
Treat any crowd funding as your beer money fund, especially when you don’t know the reputation of the creator.

 

[darjr]

Whoa! That is freaking awesome of Cryptozoic!

 

[TreChriron]

I have to chime in with the "Crytpozoic is AWESOME SAUCE"!!!

 

[darjr]

http://www.cryptozoic.com/blogs/letter-keith-baker-and-lee-moyer

Very cool of them.

 

[Celebrim]

So this is a high profile crash and burn. Some folks are talking fraud. Do you think this will affect Kickstarting?

Well, it was inevitable at some point and this is not going to be the biggest crash and burn in Kickstarter history by a long shot. Sooner or latter there is going to be some multi-million dollar project that fails and doesn't produce a product for whatever reason. That's just the nature of business and investment. Ultimately, when you fund a Kickstarter, you are an investor that hopes to be 'paid' in a future product - to realize a return on your investment.

In the long run, people are going to realize that they aren't gambling on a shiny great sounding product. They are gambling on the project's creators ability to realize the product they have described. And that means that ultimately, the project creator is going to need prove ability to deliver before he can expect a lot of new investment. What we have here was too much investment in a project creator without a proven track record of product delivery. Successful projects of the future are going to look a lot like successful business plans, and are going to be pitched a lot like you'd pitch getting a small business loan from the bank:

"I've got an existing small business, and I want to expand. I've already delivered 10,000 products, but now I want scale up production/enhance the product/increase my market, and you can benefit..."

"You may remember me from successful kickstarter projects of the past where I raised $5000 to produce wonder widgets, delivered the product and turned a small profit. Now I have the new super-wonder widget available, and we can produce it for just $15000 dollars..."

Even then, they'll be schemes and fraud and mismanagement.

But I don't expect it to kill the concept by any means. The concept is too solid and provides both customers and consumers too much freedom that is markedly lacking in the larger marketplace. Indeed, the directness of this transaction is startling - you are actually in a relationship with the guy that is doing the work for you. He may be a crook, but you know who he is. You are seldom in such a direct relationship even with the guy you pay to fix your broken bathtub. Compare that to how indirect your relationship to the guy that made your water hose for your garden, or even your family doctor is.

 

[Janx]

...snip...business plans...snip...
Even then, they'll be schemes and fraud and mismanagement.

But I don't expect it to kill the concept by any means. The concept is too solid and provides both customers and consumers too much freedom that is markedly lacking in the larger marketplace. Indeed, the directness of this transaction is startling - you are actually in a relationship with the guy that is doing the work for you. He may be a crook, but you know who he is. You are seldom in such a direct relationship even with the guy you pay to fix your broken bathtub. Compare that to how indirect your relationship to the guy that made your water hose for your garden, or even your family doctor is.

Yup. I don't think a KS business plan needs to be drafted to the same level of production that I'd need at a bank or venture capital meeting. But a guy asking for money to make his project should know the primary expenses he's trying to fund and their approximate amounts. That forms the basis of him setting the money goals of the KS in the first place.

So if a guy effectively needs to have that, he should be able to put that same info into his KS pitch. Which in turn establishes accountability on what the KS money will be used for. If rent isn't part of the primary expense list, then rent isn't an acceptable usage of the money.

This in turn may setup criteria for what constitutes KS fraud versus general KS project failure. Where the former triggers requirement to payback or legal/criminal trouble, and the latter is just part of the risk of KS investment market and a strike against the creator's reputation for his next project.

I still think KS is a great idea to take out the bigwigs that block getting things done because creators don't know the right people. There appear to be a ton of great things that have been created because the middlemen were cut out.

 

[Mark CMG]

Interesting related article here -

http://makezine.com/2013/08/02/crowdfunding-confusion/#

 

[Dice4Hire]

I just cannot see this one project hurting kickstarter too much. Sure, some of those backers might be gun shy and not back again, and who can blame them, but there are a lot of people, and a lot of kickstarters out there (Just look at the list of ten or so Morrus put up on the news page today) and so many have been very successful.

Yes, this one is a warning, but people really do not heed warnings too well when they are looking at the next bright and shiny.

 

[am181d]

I imagine that if Keith had just done the Kickstarter himself, he could have gotten the same amount of money and then hired a few guys to put out the game without all of these bogus extra expenses...

 

[Umbran]

I imagine that if Keith had just done the Kickstarter himself, he could have gotten the same amount of money and then hired a few guys to put out the game without all of these bogus extra expenses...

Well, aside from hindsight being 20/20...

Yes, but then it would have taken up his time and attention. Running a good Kickstarter campaign is not a passive thing, and he'd have then had to manage the folks he hired, which would have likely cut into his time to do other projects.