Crowdfunding has given birth to a creative golden age of products that might otherwise have not seen the light of day or otherwise reached their full potential. Whether it’s one of my new favorite video games of all time, truly creative product ideas or The Oatmeal’s artwork brought to life by blowing up kittens, crowdfunding has become a viable, disruptive alternative to traditional funding models.
Kickstarter has arguably become the face of crowdfunding and despite the incredible creative and technical works it’s produced, the platform has suffered its share of controversies. One question raised frequently has seen another surge in conversation after the mess that Peter Molyneux’s Godus has turned into. Should people who are independently wealthy or successful in their fields be able to use Kickstarter or crowdfunding in general?
First of all, we shouldn’t mandate that people use personal wealth on behalf of new business ventures the way Elon Musk has. It’s extremely admirable when people do this, but we shouldn’t force people to martyrize themselves. Moreover, if we start introducing cutoff points where someone with a certain amount of wealth, success or prestige is excluded from crowdfunding, we really only stifle the potential of crowdfunding by limiting what it can do. We also wind up giving it a measure of exclusivity that Kickstarter has explicitly said that it wants to avoid: Kickstarter believes crowdfunding is for everybody, big or small, blockbuster or indie. That’s a position I respect and I would genuinely be sad for creative, ambitious projects to not see the light of day because community watchdogs decreed that people of a certain success level weren’t entitled to the money.
Let’s also remember that Kickstarter isn’t the sole funding method of a lot of projects. Divinity: Original Sin, which is another modern all-time favorite of mine, already had a budget of €4 million but wanted to use Kickstarter as a way to expand the scope of the project (the studio was already tapped out). The game likely could have been made on its own, but the additional money turned it from a solid game into an absolutely fantastic one.
Also keep in mind that you could apply this same argument to traditional funding models. Because someone like Spike Lee or Peter Molyneux is independently wealthy, should we also restrict them from approaching venture capital firms or angel investors who believe in the company’s vision or potential? The potential rewards for actual investors are far greater than crowdfunding pledges, but so are the risks. They make that risk willingly, and so are the people who pledged to Molyneux or Lee. It becomes an issue when crowdfunding pledgers aren’t aware of what a pledge really means (see the second half of this post).
Another common argument is that the presence of the famous or wealthy on Kickstarter may potentially siphon money away from much smaller projects who need the money more. The idea that one project’s backer is another project’s loss is very subjective, but it does bear mentioning that 47% of Spike Lee’s backers were first time Kickstarter users. It should also be made clear that people pledge to projects because they connect with them, and different people will have different tastes. Exploding Kittens does not have the audience of Shadowrun Hong Kong, which does not have the audience of Spike Lee’s film, which does not have the audience of Bloomsky. There’s certainly overlap but more projects to go around does not necessarily mean less money for everybody.
It’s also worth understanding that traditional funding, even if it can be acquired, isn’t necessarily preferable. Venture capital firms have a bad reputation, and the idea of venture capitalists exerting control over creative works isn’t a desirable one. I friend and I are currently developing a video messaging mobile app, ReelTime, and I was casually introduced to a venture capitalist recently. Immediately upon learning of what ReelTime was, he suggested we start collecting detailed data to sell to advertisers. The app isn’t even out yet as of this writing, and we already had a potential financier hungry to shake users down for personal data. This isn’t an isolated story, and it can put creators and entrepreneurs off of traditional funding models.
However. All that being said…
People with far more wealth, resources and connections who do decide to use crowdfunding to obtain funds need to understand that they will – and should – be held to a much higher standard than a first time indie game developer or a scrappy two-man entrepreneurial team subsisting on ramen noodles. The stakes are simply different; we know for a fact that someone like Peter Molyneux is a 30-year industry veteran and has a much more profound understanding of the cost to design, produce, and budget video games. Spike Lee is a tremendously important voice in film with decades of experience making it.
As a result, when Tim Schafer experiences the outrage he did when Broken Age ran out of money, it’s not unwarranted. The backlash Peter Molyneux faced when he admitted he couldn’t deliver on Kickstarter promises is also something to be expected. Project creators tend to rely on their pedigree when seeking funding and it tends to make for very successful Kickstarters. This is a fair strategy, but be aware that the same pedigree is why people are going to hold you to much higher standards in terms of expectations and project delivery. You’re a leader in your industry, so when you use Kickstarter or Indiegogo, act like it. Don’t go months without updates or ignore messages on Facebook or Twitter. You would never do this with actual investors and it’s no better doing it to your fans.
Famous or well known people who are using crowdfunding also needs to understand that crowdfunding’s reputation is in a shaky position due to poorly communicated failed projects if not outright scams. Everything you do represents the platform as a whole, especially because individuals rather than investors are giving you money. People feel robbed or cheated when Godus fails to meet its promised goals or when Elite: Dangerous removes a promised feature shortly before release. True or not, that’s the state of play, and people who are alienated won’t trust Kickstarter as easily. Your actions that reflect negatively on Kickstarter negatively impact the independent or fringe creators who lack the resources you do and may rely on crowdfunding much more.
I mentioned earlier that even when you have the ability to secure venture capital it may not necessarily be the best course of action. When individuals rather than investors give you money, it can be tempting to believe that you aren’t “on the hook” to pledgers in the same way that you are investors. While this is strictly true since pledgers don’t have an equity stake, it’s really only an excuse to justify missed deadlines, a lack of transparency or bad communication. The reason you’re in the position you’re in is because of these people who give you their money in good faith. Treat these people with the respect you would investors. If not because it’s the right thing to do, then do it because the Internet is known for not letting stuff die. Don’t take my word for it; Google Erik Chevalier’s name and watch page after page of his failed Kickstarter come up.
It’s also very reasonable to ask something that Eurogamer brings up: Why, when you have the connections, access to potential investors and personal wealth, would someone like Peter Molyneux or Brian Fargo pursue crowdfunding in the first place? If there are legitimate reasons, you need to be crystal clear and transparent about them, and potential pledgers on Kickstarter should do very careful due diligence before pledging money. It’s entirely possible that there were good reasons why traditional funding couldn’t be acquired. Curt Schilling’s 38 Studios alienated many potential investors including Todd Dagres of Spark Capital, who noted that Schilling lacked appropriate talent to make an MMO and was putting an extravagant amount of money into a risky venture.
So that’s my take on successful people using crowdfunding. We shouldn’t exclude anybody from a viable alternate funding system to traditional funding (especially when venture capital firms have the reputation that they do). At the same time, not all crowdfunding projects are created equal. You have much more responsibility as an established leader in your field to your fans and to crowdfunding as a whole. Understand the seriousness of what it means to take peoples’ money on faith and don’t be Peter Molyneux. Focus on delivering a product that will make people joyous that they gave you that money.