Kickstarter Explained

Kickstarter, PBC
Collapsible:yes
Collapsetext:Screenshot
Location City:Brooklyn, New York City, U.S.
Industry:Financial services
Internet
Founder:Perry Chen
Yancey Strickler
Charles Adler
Ceo:Everette Taylor
Website Type:Crowdfunding
Net Income:$1.3 million after tax (2019)
Company Type:Delaware-registered public-benefit corporation
Employees:140 (before May 2020 40% staff reduction)

Kickstarter, PBC is an American public benefit corporation[1] based in Brooklyn, New York, that maintains a global crowdfunding platform focused on creativity.[2] The company's stated mission is to "help bring creative projects to life".[3] As of February 2023, Kickstarter has received US$7 billion in pledges from 21.7 million backers to fund 233,626 projects, such as films, music, stage shows, comics, journalism, video games, board games, technology, publishing, and food-related projects.[4]

People who back Kickstarter projects are offered tangible rewards or experiences in exchange for their pledges.[5] This model traces its roots to subscription model of arts patronage, in which artists would go directly to their audiences to fund their work.[6]

History

Kickstarter launched on April 28, 2009,[7] by Perry Chen, Yancey Strickler, and Charles Adler. The New York Times called Kickstarter "the people's NEA".[8] Time named it one of the "Best Inventions of 2010"[9] and "Best Websites of 2011".[10] Kickstarter reportedly raised $10 million funding from backers including NYC-based venture firm Union Square Ventures and angel investors such as Jack Dorsey, Zach Klein and Caterina Fake.[11] The company was based at 58 Kent Street in Greenpoint, Brooklyn until they transitioned to a fully remote workforce after the COVID-19 pandemic.[12] [13]

On February 14, 2013, Kickstarter released an iOS app called Kickstarter for the iPhone.[14] The app was aimed at users who create and back projects and was the first time Kickstarter had an official mobile presence.[15]

On October 31, 2012, Kickstarter opened projects based in the United Kingdom,[16] followed by projects based in Canada on September 9, 2013, Australia and New Zealand on November 13, 2013,[17] the Netherlands on April 28, 2014, Denmark, Ireland, Norway, and Sweden on September 15, 2014,[18] Germany on April 28, 2015, France and Spain on May 19, 2015,[19] Austria, Belgium, Italy, Luxembourg and Switzerland on June 16, 2015, Singapore and Hong Kong on August 30, 2016,[20] Mexico on November 15, 2016, and Japan on September 12, 2017. In July 2017, Strickler announced his resignation.[21]

On April 20, 2020, Kickstarter announced that it was likely going to lay off workers due to the coronavirus pandemic causing the number of active projects to be "about 35% below what it was at this time last year with no clear sign of rebound."[22] The layoff was reported by the union to affect up to 45% of the employees, although Kickstarter has yet to report the scale of the layoff as of May 2, 2020. The union negotiated a settlement for laid off employees including four months of severance pay and up to six months of continued health benefits for anyone who gets laid off, recall rights for a year (so that those laid off can return to job openings), and a release from noncompete agreements for those who accept severance pay.[23]

In December 2021, Kickstarter announced they would be moving their platform to blockchain, with the aim of making the tools required for creating a crowdfunding site available to anyone.[24] The pivot came on the back of a $100 million investment from the crypto fund of Andreessen Horowitz. The decision backfired, alienated many users, damaging Kickstarter's reputation.[25]

Model

Kickstarter is one of a number of crowdfunding platforms for gathering money from the public, which circumvents traditional avenues of investment.[26] [27] Project creators choose a deadline and a minimum funding goal. If the goal is not met by the deadline, no funds are collected (a kind of assurance contract).[28]

The kickstarter platform is open to backers from anywhere in the world and to creators from many countries, including the US, UK,[29] Canada,[30] Australia, New Zealand,[17] The Netherlands, Denmark, Ireland, Norway, Sweden, Spain, France, Germany, Austria, Italy, Belgium, Luxembourg, Switzerland and Mexico.

Kickstarter applies a 5% fee on the total amount of the funds raised.[31] Its payments processor applies an additional 3–5% fee.[32] Unlike many forums for fundraising or investment, Kickstarter claims no ownership over the projects and the work they produce. The web pages of projects launched on the site are permanently archived and accessible to the public. After funding is completed, projects and uploaded media cannot be edited or removed from the site.[33]

There is no guarantee that people who post projects on Kickstarter will deliver on their projects, use the money to implement their projects, or that the completed projects will meet backers' expectations. Kickstarter advises backers to use their judgment on supporting a project. They also warn project leaders that they could be liable for legal damages from backers for failure to deliver on promises.[34] Projects might also fail even after a successful fundraising campaign when creators underestimate the total costs required or technical difficulties to be overcome.[35] [36]

When asked what made Kickstarter different from other crowdfunding platforms, co-founder Perry Chen said: "I wonder if people really know what the definition of crowdfunding is. Or, if there's even an agreed upon definition of what it is. We haven't actively supported the use of the term because it can provoke more confusion. In our case, we focus on a middle ground between patronage and commerce. People are offering cool stuff and experiences in exchange for the support of their ideas. People are creating these mini-economies around their project ideas. So, you aren't coming to the site to get something for nothing; you are trying to create value for the people who support you. We focus on creative projects—music, film, technology, art, design, food and publishing—and within the category of crowdfunding of the arts, we are probably ten times the size of all the others combined."[37]

Projects

On June 21, 2012, Kickstarter began publishing statistics on its projects.[38] As of December 4, 2019, there were 469,286 launched projects (3,524 in progress),[39] with a success rate of 37.45% (success rate being how many were successfully funded by reaching their set goal). The total amount pledged was $4,690,286,673.[40]

The business grew quickly in its early years. In 2010 Kickstarter had 3,910 successful projects and $27,638,318 pledged. The corresponding figures for 2011 were 11,836 successfully funded projects and $99,344,381 pledged; and there were 18,109 successfully funded projects, $610,352 pledged in 2012.[41]

On February 9, 2012, Kickstarter hit a number of milestones. A dock made for the iPhone designed by Casey Hopkins became the first Kickstarter project to exceed one million dollars in pledges. A few hours later, a new adventure game project started by computer game developers, Double Fine Productions, reached the same figure, having been launched less than 24 hours earlier, and finished with over $3 million pledged.[42] This was also the first time Kickstarter raised over a million dollars in pledges in a single day.[43] On August 30, 2014, the "Coolest Cooler", an icebox created by Ryan Grepper, became the most funded Kickstarter project in history, with US$13.28 million in funding, breaking the record previously held by the Pebble smartwatch.[44]

From 2012 to 2013, Wharton professor Ethan Mollick and Jeanne Pi conducted research into what contributes to a project's success or failure on Kickstarter. Some key findings from the analysis were that increasing goal size is negatively associated successfully, projects that are featured on the Kickstarter homepage have an 89% chance of being successful, compared to 30% without, and that for an average $10,000 project, a 30-day project has a 35% chance of success, while a 60-day project has a 29% chance of success, all other things being constant.[45]

The ten largest Kickstarter projects by funds raised are listed below. Among successful projects, most raise between $1,000 and $9,999. These dollar amounts drop to less than half in the Design, Games, and Technology categories. However, the median amount raised for the latter two categories remains in the four-figure range. There is substantial variation in the success rate of projects falling under different categories. Over two thirds of completed dance projects have been successful. In contrast, fewer than 30% of completed fashion projects have reached their goal. Most failing projects fail to achieve 20% of their goals and this trend applies across all categories. Indeed, over 80% of projects that pass the 20% mark reach their goal.

Categories

Creators categorize their projects into one of 13 categories and 36 subcategories.[46] They are: Art, Comics, Dance, Design, Fashion, Film and Video, Food, Games, Music, Photography, Publishing, Technology and Theater. Of these categories, Film & Video and Music are the largest categories and have raised the most money. These categories, along with Games, account for over half the money raised. Video games and tabletop games alone account for more than $2 out of every $10 spent on Kickstarter.[47]

Guidelines

To maintain its focus as a funding platform for creative projects, Kickstarter has outlined three guidelines for all project creators to follow: creators can fund projects only; projects must fit within one of the site's 13 creative categories; and creators must abide by the site's prohibited uses, which include charity and awareness campaigns. Kickstarter has additional requirements for hardware and product design projects. These include[48] [49]

The guidelines are designed to reinforce Kickstarter's position that people are backing projects, not placing orders for a product. To underscore the notion that Kickstarter is a place in which creators and audiences make things together, creators across all categories are asked to describe the risks and challenges a project faces in producing it. This educates the public about the project goals and encourages contributions to the community.[51]

Notable projects and creators

Several creative works have gone on to receive critical acclaim and accolades after being funded on Kickstarter. Others, such as the Ouya console, have resulted in commercial failure.[52] The documentary short "Sun Come Up" and documentary short "Incident in New Baghdad" were each nominated for an Academy Award;[53] [54] contemporary art projects "EyeWriter" and "Hip-Hop Word Count" were both chosen to exhibit in the Museum of Modern Art in 2011;[55] filmmaker Matt Porterfield was selected to screen his film Putty Hill at the Whitney Biennial In 2012;[56] author Rob Walker's Hypothetical Futures project exhibited at the 13th International Venice Architecture Biennale;[57] musician Amanda Palmer's album Theatre is Evil debuted at No. 10 on the Billboard 200;[58] designer Scott Wilson won a National Design Award from Smithsonian's Cooper-Hewitt, National Design Museum following the success of his TikTok + LunaTik project;[59] the Kickstarter funded GoldieBlox toy gained nationwide distribution in 2013;[60] and approximately 10% of the films accepted into the Sundance, SXSW and Tribeca Film Festivals are projects funded on Kickstarter.[61] [62]

The Glowing Plant project was the first and only synthetic biology campaign on Kickstarter.[63]

The Oculus Rift began as a 2012 Kickstarter project and became one of the most funded projects at the time. The company was then acquired by Facebook two years later for $2 billion.[64] Peloton Interactive sold its first exercise bike on Kickstarter in 2013 with an early bird price tag of $1,500. It became a public company in 2019 via an initial public offering raising $1.1 billion.[65] Cards Against Humanity originated with a $4,000 Kickstarter campaign in 2010.[66] [67]

Top projects by funds raised

See also: List of highest-funded crowdfunding projects.

Ten largest successfully completed Kickstarter projects by total funds pledged (only closed fundings are listed)[68]
Rank Total USD Project name CreatorCategory % funded Backers Closing date
1 41,754,153 Surprise! Four Secret Novels by Brandon SandersonDragonsteel Entertainment Publishing 4,175 185,341 31 March 2022
2 20,338,986 Pebble Time – Awesome Smartwatch, No Compromises[69] Pebble Technology Product design 4,067 78,471 27 March 2015
3 13,285,226 Coolest Cooler

21st Century Cooler that's Actually Cooler[70]

Ryan Grepper Product design 26,570 62,642 30 August 2014
4 12,969,608 Frosthaven[71] Cephalofair Games Tabletop games 2,594 83,193 1 May 2020
5 12,779,843 Pebble 2, Time 2 + All-New Pebble Core[72] Pebble Technology Product design 1,277 66,673 30 June 2016
6 12,393,139 Kingdom Death: Monster 1.5[73] Kingdom Death/Adam Poots Tabletop games 12,393 19,264 7 January 2017
7 12,179,651 EcoFlow DELTA Pro: The Portable Home Battery EcoFlow Hardware 12,180 3,199 13 September 2021
8 12,143,435 Travel Tripod by Peak Design[74] Peak Design Product design 2,429 27,168 13 December 2019
9 11,385,449 Critical Role: The Legend of Vox Machina Animated Special[75] [76] Critical Role ProductionsFilm 1,518 88,887 19 April 2019
10 10,266,845 Pebble: E-Paper Watch for iPhone and Android[77] Pebble Technology Product design 10,266 68,929 18 May 2012
Top projects by number of backers
Rank Backers Project name CreatorCategory Total USD Closing date
1 219,382 Exploding KittensExploding Kittens Tabletop games 8,782,571 20 February 2015
2 185,341Surprise! Four Secret Novels by Brandon SandersonDragonsteel Entertainment Publishing 41,754,15331 March 2022
3 154,926 Fidget CubeMatthew and Mark McLachlan Product design 6,465,690 20 October 2016
4 105,857 Bring Reading Rainbow Back for Every Child, Everywhere!LeVar Burton & Reading Rainbow Web 5,408,916 3 July 2014
5 91,585 The Veronica Mars Movie ProjectRob ThomasFilm 5,702,153 13 April 2013
6 88,887 Critical Role: The Legend of Vox Machina Animated SpecialCritical Role Productions Film 11,385,449 19 April 2019
7 87,142 Double Fine and 2 Player ProductionsFilm/video games 3,336,371 14 March 2012
8 85,581 Bears vs Babies - A Card GameExploding Kittens Tabletop games 3,215,679 18 November 2016
9 83,193 FrosthavenCephalofair Games Tabletop games 12,969,608 1 May 2020
10 81,567 Magpie Games Tabletop games 9,535,317 2 September 2021

Project cancellations

See also: Vaporware. Both Kickstarter and project creators have cancelled projects that appeared to have been fraudulent. Questions were raised about the projects in internet communities related to the fields of the projects. The concerns raised were: apparent copying of graphics from other sources; unrealistic performance or price claims; and failure of project sponsors to deliver on prior Kickstarter projects.

Some notable cancelled projects include:

Controversies

Projects

Many individual Kickstarter projects caused controversy:

Patent disputes

Data breach

In February 2014, Kickstarter announced a data breach of almost 5.2 million users' data, including email addresses, usernames and salted SHA-1 hashes of passwords.[113]

Unionizing efforts

On March 19, 2019, Kickstarter's staff announced plans to unionize as part of the Office and Professional Employees International Union (OPEIU), which would make Kickstarter the only major tech company to have a union.[114] [115] Shortly after the announcement, three senior staffers released a memo dissenting against the decision, claiming that it is too extreme and that it would be a "misappropriation of unions for use by privileged workers."[116] According to Kickstarter employees, they wanted to found a union both for enabling collective bargaining for wages and for "giving employees more clout," allowing them to work for goals that they saw in their interest and the public's interest.[117]

In May, Aziz Hasan, then CEO of Kickstarter, announced that the company would require an election for the union rather than voluntarily recognizing it, saying that "our view is that we are better set up to be successful without the framework of a union."[118]

On September 16, the employees filed a complaint against Kickstarter with the National Labor Relations Board (NLRB) after two employees were terminated. According to the workers, they were fired for unionizing, although the company says it was for "performance issues."[119] [120] After these allegations, some Kickstarter creators have started a campaign against Kickstarter to let its employees unionize.[121] [122]

On September 28, Kickstarter confirmed that it would not recognise the unionisation effort. In a statement addressed to project creators, the CEO stated that unionisation would turn workplace relations "inherently adversarial" and that it "doesn't reflect who we are as a company." Additionally, the CEO confirmed that Kickstarter stood by its decision to fire the two employees and would be pursuing legal action to fight their claims.[123] The statement immediately resulted in criticism and calls for boycotts from creators who had previously used the platform,[124] while writer Neil Gaiman tweeted that he would be unlikely to post support for or links to new Kickstarter campaigns "as long as they are anti-union."[125]

Kickstarter employees continued to file complaints to the NLRB, which forced Kickstarter to allow its employees a formal vote on unionization. The vote was held on the morning of February 18, 2020, with 46 voting in favor of joining the OPEIU and 37 voting against.[126] The CEO at the time, Aziz Hasan, said after the vote, "We support and respect this decision, and we are proud of the fair and democratic process that got us here."[127] With this, the OPEIU will now work with the union effort, Kickstarter United, to bargain with Kickstarter management for a contract.[128]

As of May 2, 2020, 60% of the workforce was part of the union.

Blockchain

On December 8, 2021, Kickstarter announced a plan to develop a decentralized protocol on blockchain platform Celo to build an open source and blockchain-based crowdfunding infrastructure and then move its own website to that system.[129] The announcement prompted backlash from creators and backers on Twitter, many of whom pledged to abandon Kickstarter if the move went forward.[130] [131] On December 15, a week later, Kickstarter responded to the controversy in a blog post that clarified the company's position but did not indicate a change of plans.

See also

Notes and References

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  2. News: Kickstarter crowdfunding site officially launches in Canada . 14 October 2013 . The Canadian Press . 10 September 2013.
  3. News: Kickstarter: We Don't Have Anything Against Celebrity Projects . . Gannes . Liz . May 29, 2010 .
  4. Web site: Kickstarter Official Stats . Kickstarter . 23 July 2021.
  5. News: The Trivialities and Transcendence of Kickstarter . Walker . Rob . 5 August 2011 . .
  6. News: Kickstarters of Yore: Mozart, Lady Liberty, Alexander Pope . . Garber . Megan . 29 June 2013 .
  7. News: Kickstarter Launches Another Social Fundraising Platform . April 29, 2009 . Wauters . Robin .
  8. News: The Trivialities and Transcendence of Kickstarter. Walker. Rob. August 5, 2011. The New York Times. June 20, 2012.
  9. News: The 50 Best Inventions of 2010. https://web.archive.org/web/20101114081032/http://www.time.com/time/specials/packages/article/0,28804,2029497_2030652_2029823,00.html. dead. November 14, 2010. Snyder. Steven James. November 11, 2010. TIME. June 20, 2012.
  10. News: The 50 Best Websites of 2011. https://web.archive.org/web/20110923161823/http://www.time.com/time/specials/packages/article/0,28804,2087815_2088176_2088182,00.html. dead. September 23, 2011. McCracken. Harry. August 16, 2011. TIME. June 20, 2012.
  11. Web site: Kafka. Peter. Kickstarter Fesses Up: The Crowdsourced Funding Start-Up Has Funding, Too. All Things D. Dow Jones & Company Inc.. February 7, 2012.
  12. Web site: Anderson . Nicole . Kickstarter Headquarters . . 2015-05-26 . 2018-04-07 . mdy-all .
  13. Delaney . Kevin J. . March 27, 2022 . As Kickstarter Launches a 4-Day Workweek, Its CEO Steps Down . Time.
  14. Web site: Kickstarter for iPhone for iPhone 3GS, iPhone 4, iPhone 4S, iPhone 5, iPod touch (3rd generation), iPod touch (4th generation), iPod touch (5th generation) and iPad on the iTunes App Store. February 15, 2013. iTunes.
  15. News: Kickstarter? There's now an official iPhone app for that. Dredge. Stuart. January 14, 2013. The Guardian. February 15, 2013.
  16. Web site: Kickstarter in the UK » The Kickstarter Blog — Kickstarter. Kickstarter.com. Perry Chen . Yancey Strickler . Charles Adler . 2013-09-18.
  17. Web site: Starr . Michelle . Kickstarter officially opens in Australia and New Zealand . dead . https://web.archive.org/web/20170729143830/https://www.cnet.com/au/news/kickstarter-officially-opens-in-australia-and-new-zealand/ . July 29, 2017 . July 4, 2022 . CNET.
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  20. Web site: Kickstarter opens in Asia, starting in Hong Kong and Singapore. Ho. Victoria. Mashable. 31 August 2016. 2017-04-18.
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  22. Web site: Kickstarter plans layoffs after new projects on the site drop off by 35 percent. Carman. Ashley. 2020-04-20. The Verge. en. live. https://web.archive.org/web/20200420185022/https://www.theverge.com/2020/4/20/21228412/kickstarter-layoffs-planned-coronavirus-project-declines-crowdfunding-union. 2020-04-20. 2020-04-21.
  23. Web site: Kickstarter union reaches agreement with management for laid-off workers. Lyons. Kim. 2020-05-02. The Verge. en. live. https://web.archive.org/web/20200502191639/https://www.theverge.com/2020/5/2/21245092/kickstarter-union-agreement-laid-off-workers. 2020-05-02. 2020-05-03. Kickstarter United, the union that represents 60 percent of the company’s 140 employees, said the agreement includes four months of severance pay for all laid-off employees, a release from any non-compete agreements for anyone who accepts severance, and recall rights for one year. The company will continue healthcare coverage for any laid-off employees for up to six months, depending on salary..
  24. Web site: Kickstarter plans to move its crowdfunding platform to the blockchain – TechCrunch . Techcrunch.com . 2021-01-15 . 2022-03-13.
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  29. News: Kickstarter starts welcoming UK creators with projects launching Oct. 31 . October 10, 2012 . . October 10, 2012 . October 6, 2020 . https://web.archive.org/web/20201006053146/https://gigaom.com/2012/10/10/kickstarter-starts-welcoming-uk-creators-with-projects-launching-oct-31/ . dead .
  30. https://techcrunch.com/2013/06/27/kickstarter-allowing-canada-based-projects-beginning-this-summer/ Kickstarter Allowing Canada-Based Projects Beginning This Summer
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  37. Web site: Davison . Hallie . THE Q&A: PERRY CHEN, KICKSTARTER . More Intelligent Life . The Economist . 28 May 2015 . dead . https://web.archive.org/web/20150528181618/http://moreintelligentlife.com/blog/qa-perry-chen-kickstarter . 28 May 2015 .
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  50. Web site: Cha, Ariana Eunjung, "Glowing plants spark environmental debate" The Seattle Times 5 October 2013. . The Seattle Times . 9 October 2014 . dead . https://web.archive.org/web/20141020143254/http://seattletimes.com/html/nationworld/2021975205_plantglowxml.html . 20 October 2014 .
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