Brooklyn Bridge Kickstarter

Crowdfailing: The Downside of "Successful" Crowdfunding

Geek Culture Internet Kickstarter

Brooklyn Bridge Kickstarter

For every Veronica Mars Kickstarter success story, there are crowdfunding projects that just didn’t work out—and I’m not just talking about projects that don’t hit their funding goals. In fact, some of the most dispiriting stories may be when a successfully-funded project unravels.

While I’m still backing projects on Kickstarter and I love supporting people who dream big, I admit that the cracks are starting to show. Early this year there was a story of the first time a Kickstarter backer sued a project creator for failing to deliver a project. (The lawsuit in question was actually filed in 2012, and the project creator later filed bankruptcy.) One of last year’s big stories was about The Doom That Came to Atlantic City—a board game that looked like it would never get made, until Cryptozoic gave it a happy ending by stepping in to produce it themselves. But there are many more projects that don’t get that sort of Hollywood ending … and thousands of backers who are still waiting for things to be delivered.

Most of the complaints I’ve seen are about board games simply because that’s where I spend most of my time, but I know that videogames have also been notorious for being extremely late, over budget, or incomplete. Despite the fact that many big-budget videogames are still in development limbo, hopeful gamers continue to back videogame projects as well.

The latest story, from earlier this month, is about the first US consumer-protection lawsuit against a Kickstarter project creator, filed by the Washington Attorney General. The project in question is the Asylum Playing Card project, which raised $25k in October 2012 and has yet to deliver. At least 31 of the 810 backers are from Washington State, and the Attorney General is using the lawsuit to send a message that they will hold project creators accountable. But will it work? In this case, it seems apparent that there is actual fraud involved, but in many cases it’s hard to tell if it’s just a combination of poor planning and unlucky circumstances.

Case in point: I read an article on Medium that tells the story from the project creator’s perspective, “The Economics of a Kickstarter Project.” Artist Cameron Moll ran a project for a letterpress type poster of the Brooklyn Bridge, and raised nearly $65k on an initial goal of $10k. Seems like a pretty sweet deal, right? So how much did Moll pocket after all was said and done? Less than $5,000. Sure, $5,000 is nothing to sneeze at, but it’s not much compensation for 5 months of work—and that’s just from the time the funding ended, not including any work that went into building the campaign itself.

Moll’s story doesn’t end too badly: although it took longer than planned to deliver all the posters (partly due to a typo that nobody caught until it was too late), it seems that his backers are happy and he’s fulfilled his promises. He ended up making a little bit of money, though far less than he expected (and certainly less than most people would assume by looking at his final funding amount).

Will I continue to back crowdfunding campaigns? Yes, because I still like the idea at the heart of Kickstarter, even if sometimes the business of crowdfunding has grown well beyond that. And I may even launch another crowdfunding campaign myself someday—with a lot more planning.

But for anyone considering a crowdfunding campaign of their own, all of these stories are a sobering reminder that crowdfunding isn’t always (or even often) an easy path to fortune.

Liked it? Take a second to support GeekDad and GeekMom on Patreon!

18 thoughts on “Crowdfailing: The Downside of "Successful" Crowdfunding

  1. For me, the biggest problem I’m encountering of late with Kickstarter projects (all types, not just games) is that the project owners simply aren’t able to properly judge their delivery times properly. I have one Kickstarter that has passed the 3-year mark for its deliverable (and I don’t expect them to ever deliver the final product — a documentary feature on the Maker Movement).

    I have a few stellar KS projects that have delivered on time, and even those that delivered 2-3 months late I can live with. Most of my KS projects, however, seem to be 6-months or more late. I’m like you, Jonathan… I doubt I’ll ever stop backing KS projects, but I do know I seem to be much more wary and picky. I often now wait until the last day to back so I can read all updates and comments from the project owners as they respond to questions from commenters. I’ve passed on a dozen or more games that I wanted to back but I just wasn’t confident in their expected delivery date. I’d rather spend $10 extra and just buy the game when it eventually hits store shelves than give my money a year or more in advance of a product’s release.

    You really have to trust your gut on these things — I sat in and listened to the Code Hero project creator (Alex) at Maker Faire in 2012 and then asked him some questions after his presentation. I wasn’t convinced and chose not to back the project. A wise choice — Alex is now in deep trouble with his backers as he’s run out of money, is facing a potential class-action suit in California (where he’s based and where a lot of backers are forming together to pursue this, I believe), and makes no real effort to communicate with his backers. As more and more KS projects fail to deliver, I think word of mouth and just common knowledge is going to start slowing down the KS machine.

    1. James- the documentary you backed wasn’t “Maker: A Documentary on the Maker Movement” by any chance? That one premiered at Maker Faire on Saturday.

  2. I funded a weight loss book for geeks on indiegogo (Weight Hacking) in may of 2012. It was supposed to have been completed later that year. However, there is still no end in sight. Its very frustrating to get excited about something like that just to have it seem to fizz out. Especially when the author seems to have just lost interest and updates very infrequently after the funding ends.

  3. As jamesfloydkelly pointed out, there’s often a delay with Kickstarted games…especially with ones that had very successful campaigns, and have maybe offered more to the backers than they were able to produce in the estimated delivery window. Unfortunately for the people that run the Kickstarters, those estimated project delivery windows are set at the start of the campaign, and can’t be changed. I’m currently waiting on delivery for a couple of games that have been victims of their own success, “All Quiet on the Martian Front,” and “Cthulhu Wars.” They both had an estimated delivery of December 2013…AQotMF has started its shipping process, and Cthulhu Wars is likely shipping in September.

    The important distinction for both these projects is that the creators have been good about updating on progress for the games. I’ve never felt like I’m not going to receive what I pledged for. Not only that, but in the case of All Quiet, the value in Kickstarter rewards is phenomenal compared to retail costs.

    These stand in stark contrast to another Kickstarter that I had been pledged to, which thankfully I was able to receive a refund for recently: Guardians Chronicles. I had gotten into the Kickstarter based upon the artwork and concept: a superhero version of “Descent,” where one person plays as a supervillain and his minions, and the rest of the players as a superhero team attempting to thwart the villain. Additionally, the Kickstarter was being run by IELLO, a quality games publisher.

    Guardians Chronicles was originally supposed to deliver in October 2013. More concerning than the delays, however, has been the lack of general communication from IELLO, and some of the outright deception and backpedalling on what was offered during the campaign. One of the biggest concerns was a switch that they made from high-quality miniatures based on the lovely sculpts shown during the campaign, to low-quality ones that have been made from digital sculpts(that were obviously only loosely based on those original miniatures). An example can be seen here: http://imgur.com/Wya3zdf (The original sculpt is on the right.)

    I won’t take up too much space to describe all the problems that many of us backers had with how IELLO was running the campaign; if you’re interested, you can always search for their Kickstarter page, or read the forums on boardgamegeek.com: http://boardgamegeek.com/boardgame/140779/guardians-chronicles

    I will just finish by saying that IELLO did open up some refunds…basically removing the most vocal critics of their campaign(some removed WITHOUT requesting a refund, which is allowed by Kickstarter btw). Since they got rid of the critics, IELLO has been much more active on their Kickstarter page, but I’m personally glad I got a refund. I still have serious doubts that the company is going to produce a game approaching the quality of what people pledged for during the campaign.

  4. Crowdfunded projects should be viewed like any other startup company – i.e. there will be a high failure rate. Even if a project is fully funded, you don’t know how competent the founders are to actually put together a realistic plan and execute on the plan. I think it’s unrealistic to assume otherwise.

    I think it would be a shame for unrealistic investor expectations to bring down sites like KS or other crowdfunding sites. Rather, I think we as independent investors should simply have realistic expectations. A high percentage of projects fail for numerous reasons. Spread your investments out across a broad portfolio and be happy when some succeed.

  5. Yes, it seems to be a problem with managing expectations.

    I’ve had pretty good luck with miniatures-based kickstarters so far, in that I’ve backed several and the only problems have been occasional delayed shipping (and one case of buyer’s remorse after the hype died down and the product, which delivered EXACTLY as promised, wasn’t as cool as I had imagined). These have varied in total funding from hundreds of dollars to millions of dollars.

    You have to approach it from an angle of trust. Does the company feel legit? Do the delivery dates seem reasonable? How much pre-planning does it look like they have done? Have they done any previous successful KS campaigns?

    I’ve passed on otherwise very attractive KS campaigns because the operation seemed shady. I’ve bitten on others because the mom-and-pop dynamic in the intro video was adorable and the promises seemed attainable (and I was VERY happy – I ended up with some of the nicest Dwarf miniatures I’ve seen, delivered on-time).

    1. I definitely approach Kickstarter with different expectations than some people, which keeps me from getting upset. I realize that I’m backing somebody who may have a fantastic idea but may have little or no experience in the relevant industry, and so I expect delays. Of the projects I’ve backed which have delivered, the average is 5-6 months late, and about 75% of the projects I’ve backed have been late.

      However, many people come to Kickstarter or Indiegogo from an ad or maybe through a review and don’t realize how crowdfunding works. It is NOT just a simple pre-order system, and if the backer treats it as such, then there is bound to be disappointment.

      I’ve passed on Kickstarters that seem shady, but I’ve also backed projects where I can tell the person is inexperienced, in the hopes that they’ll succeed. It’s a bit like being a patron: you get to shell out the money for somebody to attempt their dream, and you root for them. Some people will fail, and that’s a given, but I think the harshest punishment should be focused on those who are trying to defraud rather than those who are simply in over their heads.

  6. I keep wondering when someone is going to develop a Consumer Reports-style website that ranks KS projects by risk, maybe does some due diligence itself, etc… probably would cost money to fund a team of investigators, but I would readily chip in $25 per year for a membership to a website that did good deep due diligence on requested KS projects from subscribers.

    1. Jim, check out Spieleschmiede: http://www.spiele-offensive.de/cfss.php

      It’s not quite what you describe, but it’s a crowdfunding site hosted by a German board gaming site called Spiele Offensive, and each campaign has a small section where the folks who run the site have rated and approved the company running the project. It’s a pretty small section, but they do at least check on the project before approving it. I feel like Kickstarter does less due diligence on their own, because they pass on any risk to the backers and doesn’t take responsibility when something goes wrong.

      That’s another discussion: SHOULD Kickstarter be held liable for things that go wrong? Should they be vetting each project more carefully, or does it make sense to let the market sort things out? I suppose then you have to discuss what you feel the purpose of Kickstarter is—and for me, I don’t know that the due diligence is necessarily part of their business model.

      What you’re describing—I think it sounds like a cool idea, but how would you be able to track ALL of the Kickstarter projects? Just now, I added up all the projects that are CURRENTLY on Kickstarter: 4,805. And of course more launch every day. I’m not sure how any single group (aside from the company that actually approves the projects to begin with) could hope to dig into that many projects. The other issue, of course, is that they’d have a very limited amount of time to dig into them—and the person running a Kickstarter campaign often has very limited time and attention to devote to anything but just keeping the campaign going. This adds another layer of emails/comments that they’d have to handle.

      Not saying it’s not a good idea, but it’s a pretty big task to tackle.

      1. More of a pipe-dream post. I realize there’s no way to do this, but as you say… niches could be monitored like the one you mentioned about board games.

  7. Thank you for the great article and discussion. I agree that the two big issues are custoemr expectations vs. reality and unprepared project creators vs. fraudsters.

    For myself I have almost never expected the timeliness that most projects offer or expect the final result to look like the sketch. Even a well run project will fall behind and have hiccups, and as long as there is honest and frequent communication I won’t feel like a project is unsuccesful. Unfortunatly many managers seem to stop communicatign all together when bad things happend, or downplay the impact, which only ruin the trust with backers.

    Like most commentors I have backed projects that range from somethign that strikes my fancy and am willing to “preorder” since other wise it won’t be made, to some that I was willing to donate to help someone get started. Sadly after reading about some of the horror stories though I have started being more paranoid about fraud. Now I have to read a review of a reliable source or have it a local project that I can learn more.

    Ironically a project that I am most afraid that may turn out badly is one I found out from this blog, the Bemaker project discussed Nov 8th last year. While it is only a few months behind schedule I am seeing more and more red flags. The organizer seems to genuinly care and wants the project to succeed, but the money and most of the logisitcs seems to be handled by a partner who has been accused of fraud and misleading campaigns before. The poorly handled communication isn’t helping and some of the backers have been pursuing legal action and have been very vocal about there concerns. Some of the backers may be overeacting and seem hate filled, no amount of money could justify some of the more extreme comments people have made, but I also understand no one wants to feel taken advantage of. I am cautiously optimistic since Harold does seem to be trying, but the fact that the smartmaker open build lab apparently shut down without notice last week makes me fear this may become my first true project failure. James, if you hear anything from Harold any update would be greatly appreciated.

    1. I will check for you. I know Harold personally, and he’s not a fraud. He’s run a very successful KS before this one that provided the Arduino clones, and backers overall seemed to be quite happy. I don’t know about Harold’s partner that you mention, but I have been getting the updates about BeMaker and I’m not that worried. I know Harold will do what he has to do to fulfill it… a few months doesn’t have me concerned, but as with all KS projects that go beyond 5-6 months, I’ll be keeping an eye on it.

      I’ll reach out to Harold and try to post something here if I can get any details.

      1. Thanks James,
        A few months behind schedule can almost be expected for a project that far surpasses the original goal. as long as the organizer communicates about what the issues I think it keeps everyone happy.

        In this case I have watched as people started doing chargebacks on their credit cards and filing complaints with attorney generals over a project that isn’t that far behind. I can see this could turn into a downward spiral where Harold will get stuck in a legal quagmire and not be able to complete the project. Considering how fast some people were willing to get angry I am not sure what could have been done differntly, maybe a different partner or communications, but again I am still hopeful this will work out.

  8. I’ve backed a few high-profile computer games, and I’d rather have them going live when the studios have truly finished polishing the final products, instead of aiming for the originally announced release dates. I mean, I expect them to be delayed, even several months, that’s part of the freedom offered by the KS platform, quite unlike the standard publisher driven production pipeline. Having said that, the studios are well-established and have their reputation to uphold, which makes it easier to place your trust on them.

  9. Hi all. First a thanks to Jonathan for the article and thoughts on the subject.
    I had also written some of my own thoughts on the complaint being filed and how it might impact project creators in the future.

    The article is at my website: http://www.rvzlaw.com/articles/2014/5/19/what-does-a-court-case-have-to-say-about-crowd-funding

    Some of the potential learning points/takeaways I flagged are:
    – Failure to deliver may expose a project creator to punitive damages.

    – There may be an outer limit of time where a project is presumed to have failed; independent of the creator making any statement that the project is still being worked on or not.

    – Stretch goals, and possibly add-ons and exclusives, should be considered required parts of delivery of the project to the same level as the originally promised project goal.

    – Project creators may be held to provide a refund to a backer upon request if delivery of rewards is not “timely.”

    – Project creators may be held to provide refunds to all backers whether the refund was requested or not if delivery of rewards is not performed in a “reasonable” time.

    1. Thanks for the link, Roy—hey, some thoughts from an actual attorney! I think the takeaways are pretty interesting, and I’ll be curious to see how things resolve if this goes to court. I do hope that the outer limit of time to consider a project “failed” (and thus requiring refunds to everyone) isn’t too short, because I’ve seen a lot of finished products that were fantastic in every way except that they were several months late.

      I also wondered: in this case, with the AG seeking $2,000 per person, whether that’s 31 Washingtonians or 810 total backers, how is that figure calculated, I wonder? While I certainly don’t think anyone should get away with taking money and not delivering anything, it also seems weird to demand $2000 for a $9 pledge.

      1. I’d have to look into the regulations more, but since it is a punitive request by the AG I’m not sure if the punitive amount would go to the backers or to the State. Would be great if any punitive damages would go towards providing backers and creators information and resources for making sure projects don’t go off-track. But I doubt that is likely to happen.

Comments are closed.