This Is My Brain on Kickstarter

These days, Kickstarter is close to a household name, raising nearly $500 million for books, movies, podcasts, design objects, food items and anything else someone might come up with. I just helped a coffee shop in Oakland buy a roaster. I helped Ze Frank bring back his transcendent video show. I backed my favorite menswear video series and blog. I backed an animation made of engraved wooden tiles. And yes, I backed the Pebble.

Kickstarter projectsKickstarter projects

In fact, I back a lot of projects. That’s what I want to talk about. You can read about the success of Kickstarter lots of places. Instead, I want to talk about the effect Kickstarter is having on me: I’m slowly turning into an investor.

More Than a Store

Most Kickstarter backers begin by effectively pre-ordering something they’d buy, if only it existed. I felt that way for a while.

But there are some problems with this attitude, and Kickstarter seems to be putting a great deal of effort into combating it. After all, even a successful campaign is the opposite of a sure thing. One project I backed is very clearly not going to ship. Many projects I back don’t meet expectations. And that’s where it gets interesting.

For one, I understand and accept the risks. I am no longer shocked when something goes wrong. Stuff happens. So now, when considering a project, I spend more time on the pitch video. I want to get a sense of the competence level of the people running the projects.

Also new: When a project succeeds, I get regular status updates. For industrial projects, like the Cubby, a “collar-friendly coat hook,” a whole tooling and refining process must be completed. It’s not enough to squeeze plastic into a certain shape. The plastic must shape easily and accurately, making the final project pleasant to touch. It has to be durable, and easy to produce. In the case of the Cubby, production stalled when the plastic started sticking to a metal tool. The creators explained the problem in detail, as well as possible solutions, and informed us backers when the issues were resolved. I used to find these missives tedious, but now I look forward to them. I enjoy the process as much as, and sometimes even more than, the finished product.

The Cubby coat hookKickstarter.com The award-winning Cubby coat hook

The upshot is that I no longer blink at the time it takes to produce a product or artwork. I know and expect Chinese New Year to cause lengthy delays. I expect a perfectly prototyped product to need time to mass produce. I expect film production to be a process, not an end point.

I knew my thinking had evolved when I backed Allegory. The pitch came from a guy in Chicago named Chad Schumacher. He wanted to make fancy pens out of reclaimed wood. I didn’t necessarily want one; I just liked the sense of the guy making the pitch. I wanted him to have a company so I could see what he’d do. For what it’s worth, my Dynamo is in my pocket right now. It’s a great pen. But I backed the person, with better results to show for it.

The Allegory pen projectKickstarter.com The Allegory pen project

Equity

My experiences thus far have led me to wonder how the rewards and effects of Kickstarter might evolve. For most projects, getting the thing made is the main reward, particularly for art-oriented projects. There’s no offer of equity. Kickstarter CEO Perry Chen says as much explicitly:

We think the most disruptive aspect [of Kickstarter] is the removal of the investment component. People are supporting projects because they want to see them happen. It’s so different than giving money because you want to make a profit.

I don’t see how the investment component is removed; contributing money to something you believe in — something that may or may not work out — is what I would call investment, regardless of the reason. So I’ll assume Chen is really saying, “You can’t speculate on Kickstarter, and that’s great because it keeps out the riffraff.” I can see where he’s coming from. I backed Put This On because I wanted to watch the videos. Same with Ze Frank. I’m not betting on them in the abstract. I didn’t get a hot tip that they would make me a quick buck. There’s something to that.

But I think Mr. Chen is wrong, or perhaps disingenuous, to treat this as an either/or situation. I can give somebody money because I want him or her to succeed. Or I can bet on that person’s future success. Or I can do both at the same time. Perhaps Mr. Chen is thinking of the thrum of stock markets and day traders, not always understanding the companies they instantly buy and sell. I can appreciate the concern that this leads to investments that are not sound, that generate bubbles, as well as products nobody really wants. Insofar as a company like Kickstarter can act as a corrective to that, I’m on board.

But I can also imagine a win-win situation: say there’s a guy in my town who wants to start a hardware store (maybe an artisan hardware store). I may think he’s a smart guy with big potential, and I may also really wish there were a hardware store in town. And that’s how I tend to think of Kickstarter too — except right now, I can’t really bet on the person.

Kickstarter pitchesKickstarter.com Kickstarter creators

In Aggregate

Mr. Chen and I disagree on what is disruptive. Helping previously lost-in-the-woods products like smart watches get built is a Big Deal. Helping books get published and films get made — books and films that might never have existed otherwise — is a Big Deal. But radically growing the pool of informed, interested investors, and safely training them on how to do it, on a potentially global scale, is a much bigger deal. The effects of such a shift could be long lasting and profound.

I’ve read a lot of writing about consumer culture in America, most of it negative. I’m not so sure a large consumer base is a bad thing. But consumption in the absence of investment does concern me. That’s what interests me about Kickstarter: not that they had a good idea, because I think lots of people had the idea. What interests me is the implementation. Where Kickstarter succeeds is in making many more people comfortable with participating in projects, and thereby more accustomed to an investment mind-set. This group and its comfort level are Kickstarter’s key asset.

Today, I’m just a regular guy with a pretty good salary. But what if I someday find myself truly wealthy? I will very likely want to grow that money, not just with slow-growth funds or even high-risk funds, but with actual developing companies. I enjoy the process too much not to give it a try. I want to talk to the owners. I want progress reports. I will be much better equipped when that day comes; I will be educated. Without Kickstarter, it’s hard to imagine reaching that point. I would never have thought of myself as “that kind of person.” No more.

I doubt I’m alone. It’s probable that at least some of the current crop of regular backers will become truly wealthy. The more Kickstarter and similar efforts grow, the larger the pool will be. If that group also wants to get more involved with the companies they create, we could see some very interesting effects. I can’t wait to find out.

Did the founders of Kickstarter anticipate the creation of an army of investors who might just change the world? Maybe not, but that just goes to show: when you do something interesting, the results are often surprising.