Kickstarter Lays Down New Rules For When a Project Fails

An anonymous reader writes "In a blog post, Kickstarter announced several updates to its terms of use for projects. From the article: "Kickstarter has iterated on its policies several times since it launched in 2009, with the most recent wave of revisions surrounding the site's transition from only posting projects cleared by the staff to clearing all projects that meet a basic set of criteria. Even still, some projects lack clear goals, encounter setbacks, or fail to deliver, like the myIDkey project that has burned through $3.5 million without yet to distributing a finished product. The most recent terms revision is timely: on Thursday, science fiction author Neal Stephenson announced that a game he Kickstarted in 2012 with $526,000 in funding was officially canceled."

Comments

Good. IndieGoGo should do it too

[Anonymous Coward]

Considering crap like https://www.indiegogo.com/projects/solar-roadways are there.

Re:Good. IndieGoGo should do it too

[ArcadeMan]

Romans: I think we should stop using dirt roads and instead dig a few inches and lay flat rocks in the trench to make our roads.
People of that era: Do you have any idea how much work that would involve? How many flat rocks would be required? Are you nuts?

Early 20th century: I think we should stop using roads made from flat rocks and use asphaltum to make our roads.
People of that era: Do you have any idea how much work that would involve? And to remove the rock roads? How much asphaltum would be required? Are you nuts?

Early 21th century: I think we should replace our asphalt roads with solar roadways.
People of that era: Do you have any idea how costly that would be? This will never work! Are you nuts?

Re:Good. IndieGoGo should do it too

[Njorthbiatr]

But in his defense, that doesn't really mean solar roadways are going to work.

But they have performed well in tests with bigger and better tests coming along now. So we will have solar roadways in the future, which will help power our autonomous electric cars.

Re:Good. IndieGoGo should do it too

[OakDragon]

But other than that, what have the Romans done for us?

Re:Good. IndieGoGo should do it too

[kav2k]

What I prefer in the Kickstarter model is that the money is not actually taken until the project funding deadline.

It allows to easily adjust the funding if you want to switch pledge levels (which is an absolute headache on IndieGoGo), and rectify impulsive decisions to fund something.

It also gives a sort of "time to comment". If a potentially fraudulent campaign gains traction, there are usually people sweeping in to confront project creators about it. Extreme case of that was even brought up here on Slashdot, with the iFind tags campaign, that resulted in the project being busted by Kickstarter - all before funds were collected.

With IndieGoGo? Funds are taken immediately. Good luck with refunds.

Re:Good. IndieGoGo should do it too

[Sperbels]

Given us a method for numbering Super Bowls.

Re:Good. IndieGoGo should do it too

[Anonymous Coward]

Good luck with refunds on KS - I recently had the problem where I changed the pledge level down to a lower level donation , and the KS web site acknowledge the change but when the project funded they still took the full previous amount.

No one wanted to take responsibility The Kick starter campaign owner , KS, My visa card company nor Amazon who were the collection agency. I wont be using KS again no matter how good the cause because you simply have no protection.

Caveat Emptor still very much applies

Re:Good. IndieGoGo should do it too

[Anonymous Coward]

Or the porn Olympiad of 2012.

Re:Good. IndieGoGo should do it too

[Jeremy Erwin]

A good road should last for tens of centuries. The Romans understood that, and engineered their roads accordingly. To blithely dismiss their roadbuilding expertise as consisting of "flat rocks" ignores the engineering underneath the road, described here. Or if you have kids, David Macauley's City may still hold up after nearly forty years.
  American roads rarely last more than a few decades, unless consistently and constantly maintained. But they are comparatively cheap. I hear that European approaches tend to produce a more durable road, at greater expense.

That said, the solar roadway may not turn out to be a very good road by this metric, despite the added construction expense.

Re:Good. IndieGoGo should do it too

[NotDrWho]

Mid 20th century: I think we should build flying cars and make the skies our roadways!
People of that era: That's dangerous and impractical.

Just because an idea is radical and the mainstream rejects it that doesn't make it a *good* idea. Lot's of really bad ideas have been poo-pooed by the mainstream too.

Re:Good. IndieGoGo should do it too

[NotDrWho]

I would go even farther than that. I think the money should be held in escrow by Kickstarter until the project actually DELIVERS. The business in question could still borrow from a third-party bank against that money, but it would also give Kickstarter the ability to refund it all if the project failed to actually deliver on its promises (instead of counting on the business to refund it).

Re:Good. IndieGoGo should do it too

[Anonymous Coward]

I would go even farther than that. I think the money should be held in escrow by Kickstarter until the project actually DELIVERS. The business in question could still borrow from a third-party bank against that money, but it would also give Kickstarter the ability to refund it all if the project failed to actually deliver on its promises (instead of counting on the business to refund it).

If you're going to refund the escrow in the event of project failure, you can't expect a bank to accept those same funds as collateral.

Re:Good. IndieGoGo should do it too

[Anonymous Coward]

Well, with one notable exception...

Re:Good. IndieGoGo should do it too

[meerling]

As many kickstarters use those same funds to, I don't know, actually FUND the project, that would be a really self defeating idea.

Phred & Jorj discuss funding...
"Hey Jorj, we need money to do this project, so I'm going to get money, but lock it away so we can't use until after we've finished."
"Phred, and just how are you going to do it without money in the first place?"

Re:Good. IndieGoGo should do it too

[Lumpy]

we have a winner! call me when this "glass" can last 2 winters in northern Michigan, Wisconsin, or Minnesota. The idea is flawed as all hell in regards to durability.

Then you have adhesion, until they prove that this glass has the same adhesion dry and wet as asphalt or cement it's a major fail. even highly textured glass is slippery compared to a smooth cement.

Lastly there are a TON of other factors that make the whole idea a failure that should not be funded.

Re:Good. IndieGoGo should do it too

[Firethorn]

American roads rarely last more than a few decades, unless consistently and constantly maintained.

They are cheap, but I'd also like to point out that the average amount of traffic on a American road would beat even a Roman one to shit within a decade without constant maintenance. Roman roads typically didn't have to deal with the weight we run across ours every day all day.

Solar roadways are an interesting idea, but they're reaching so far that when one of my forums got into it we found enough problems that would need to be solved, ranging from how fast glass actually wears to the question of how much power does it take to make an LED light visible during the day, to how much of the cost of a road is under-surface preparation(lots of it) which wouldn't be saved when you're putting down a solar roadway.

The end result is that we wish them the best of luck, but we don't see a lot of promise in the technology.

Re:Good. IndieGoGo should do it too

[SydShamino]

No bank would loan against money that would be returned to the backers, not the bank, were the project to fail.

Re:Good. IndieGoGo should do it too

[Anonymous Coward]

...except for Super Bowl 50, for some obscure reason.

Re:Good. IndieGoGo should do it too

[Khyber]

" call me when this "glass" can last 2 winters in northern Michigan, Wisconsin, or Minnesota."

It's existed for about 50 fucking years, made by Corning. It was made in YOUR TIME and you don't even know about it?

Jesus.

Re:Good. IndieGoGo should do it too

[Khyber]

"question of how much power does it take to make an LED light visible during the day"

Considering the sun is ~93 lumens per watt and we've got LEDs now pushing 300+ lumens per watt, not very much power, at all. One watt will put any LED brighter than even the glare on the glass.

Re:Good. IndieGoGo should do it too

[GPierce]

I can't provide links or sources, But I remember reading quite a while ago that Germany places contracts for road-building that includes maintenance for 20 - 40 years. As a result, German/European roads are built to be durable and to require as little maintenance as possible.

In the US, we build cheap sh#t knowing that the taxpayers will be on the hook for the maintenance.

Re:Good. IndieGoGo should do it too

[Firethorn]

Considering the sun is ~93 lumens per watt and we've got LEDs now pushing 300+ lumens per watt, not very much power, at all. One watt will put any LED brighter than even the glare on the glass.

The problem is that you're not just doing 1 LED when you're making lane markings using LEDs. You're lighting up dozens per hexagon, and the results we got had the power cost of the lane markings drowning out the power gained by the solar panels.

"Lumens per watt" doesn't make much sense when considering whether or not a light will be visible(and not just visible, 'easily visible') because you still have to consider how many watts the sun is putting out. Given solar panels somewhere between 10-15% efficient, you'll need a surface area at least 10 times that of the LED lighting to simply break even.

Re:Good. IndieGoGo should do it too

[omnichad]

Not too obscure. They like big imposing logos with hefty roman numerals as the supporting beams in the design. An "L" just doesn't do that. And most people who watch football don't know Roman numerals beyond X anyway.

Re:Good. IndieGoGo should do it too

[Anonymous Coward]

Romans: I think we should stop using dirt roads and instead dig a few inches and lay flat rocks in the trench to make our roads.
People of that era: Do you have any idea how much work that would involve? How many flat rocks would be required? Are you nuts?

Early 20th century: I think we should stop using roads made from flat rocks and use asphaltum to make our roads.
People of that era: Do you have any idea how much work that would involve? And to remove the rock roads? How much asphaltum would be required? Are you nuts?

Early 21th century: I think we should replace our asphalt roads with solar roadways.
People of that era: Do you have any idea how costly that would be? This will never work! Are you nuts?

So it was straight progress from the Roman era until the 21st century when road concepts took a left turn?

Re: Good. IndieGoGo should do it too

[Anonymous Coward]

I still don't get why they don't rollout those solar sidewalks at least I'll get some and then there's thousands of rooftops but I can see by looking out my window That do not have solar panels on them. The shooting for the stars is a great way to come up with ideas but the practicality is, we need to start small scale just like everything else that we have ever done, and then it becomes large.

Re:Good. IndieGoGo should do it too

[Anonymous Coward]

No bank would loan against money that would be returned to the backers, not the bank, were the project to fail.

That should probably tell you something. If no bank or VC is willing to take a chance on a project, even if it has guaranteed funding if it can actually deliver, then it's probably not very worthy.

Re:Good. IndieGoGo should do it too

[drsquare]

Even if solar roads did work, they offer no advantages, and many disadvantages, over building normal roads and just putting the solar panels in a field.

In your first two examples, there are significant advantages to rocks and asphalt. There are literally no advantages to solar roadways over other ways of doing it.

Re:Good. IndieGoGo should do it too

[dgatwood]

Of course, if it's a minor road, you might be able to save a lot of power by not showing the lines unless there's somebody actually on the road (at least during the day, when cars cast shadows). Then again, I don't suppose you would typically need movable lines on a minor road, so... never mind.

Another approach might be something more passive, where the line areas become reflective when an electrical charge causes them to line up in a certain way, so that the sun provides all the light, and where the line areas change to be transparent when you polarize them the other way, thus showing the relatively dark surface of the solar cells. Then, you could use the LEDs only at night, when the light requirements are much lower, or come up with a means of tweaking the polarity so that the lines reflect the headlights.

Re:Good. IndieGoGo should do it too

[Oligonicella]

Used as road surfaces? Yes or no. That *is* the context.

Re:Good. IndieGoGo should do it too

[ArcadeMan]

Most people who watch football probably know how to count in Roman numerals, at least up to XXX.

Re:Good. IndieGoGo should do it too

[omnichad]

Right. Which is why I said they don't know numerals beyond X, not numbers beyond X.

Re:Good. IndieGoGo should do it too

[Richy_T]

Hence Kickstarter.

Re:Good. IndieGoGo should do it too

[chmod a x mojo]

I haven't looked into it in quite a few years, but I believe the European roadways last ~2x as long as the American roadways but cost roughly the same to maintain over the same time period ( meaning it costs the same to repave the road twice with half the thickness as it does to pave once at 2x thickness... + maintenance over the same time periods). The main reason, at east used to be, that the European roadways where laid down in mats double the thickness of the American pavings.

So the only real advantage Euro-roads have is full deconstruction / reconstruction times are further apart, while having to do roughly the same minor repairs at maintenance times similar to American roadways. Basically cost wise it was a wash, with the American roadways having a lower initial cost layout to pave previously unpaved areas, a huge advantage when you think of the geographical areas needed to be paved per country.

Now of course things may have changed in the intervening time, but I doubt it. It was actually an interesting study to look at how similar the differences actually turned out to be in the end.

Re:Good. IndieGoGo should do it too

[ArcadeMan]

And this right here is the reason why Romans were never able to invent variables.

Re:Good. IndieGoGo should do it too

[Firethorn]

Some sort of colored LCD providing a sort of e-inkish surface was indeed one of the things we considered - heck, we even considered moving strips of material to expose the proper color at the proper spot. Thing is, the more systems you stuff in there, the less space for solar panels and the more it costs.

Like my first post - I wish them the best of luck, but we don't see the potential being that high. One of the other problems of the solar roads site was that they massively overstated the maintenance requirements for non-heavily traveled roads.

Re:Good. IndieGoGo should do it too

[blackraven14250]

I'm pretty sure "viable" doesn't necessarily mean "viable in every locale on planet Earth" - New Mexico might be able to do it while Minnesota may not be able to - that doesn't mean the technology is a wholesale failure.

I'm also pretty sure that indiegogo isn't an ideal way to fund it, but otherwise, it likely wouldn't get funding due to entrenched interests, so I'm all for it.

Re:Good. IndieGoGo should do it too

[blackraven14250]

I can think of one. Townships and cities may not be able to place any solar panels at all besides on top of government buildings and roads. There's not some massive usable field in New York City that you can just toss a bunch of solar panels on, and that situation pretty much extends the entire way to my township nearly 40 miles away contiguously. Even in my town, it's not really possible.

Re:Good. IndieGoGo should do it too

[Khyber]

" Given solar panels somewhere between 10-15% efficient"

What decade are you from, out of curiosity? Currently, we're pushing ~40% in top end photovoltaics ~35% in midrange/prosumer, lowly consumer stuff bought off Alibaba easily reaches 25%, and LEDs are well over 70% efficiency in monochromatic ranges (depending, blue is far more efficient than red in terms of input power/output power) which is how we're able to get 5150K 300+ lux/w white LEDs using a blue base.

Your math is about 40 years behind.

Re:Good. IndieGoGo should do it too

[Khyber]

I can tell you've never been to the Yellowstone Art Museum. One parking lot is ENTIRELY glass. Has been for as long as I can remember.

Re:Good. IndieGoGo should do it too

[Firethorn]

What decade are you from, out of curiosity?

I span many decades, though I wonder if you're from the future, seeing as how you present figures that are around double that of current mainstream stuff.

Currently, we're pushing ~40% in top end photovoltaics ~35% in midrange/prosumer, lowly consumer stuff bought off Alibaba easily reaches 25%

Let's see:
2014 review says 15% for consumer grade panels.
44.7% is the world record. However, these cells are disallowed because they're all concentrator types - they're designed for use with mirrors and such to feed them 100X+ concentrated sunlight.
21.5% is the world record for consumer grade panels.

After that we had to adjust because they'd be non-optimally placed(flat vs angled, under shade, etc...), where the light has to penetrate through thick and fairly dirty glass*, etc...

blue is far more efficient than red in terms of input power/output

Huh, looks like red LEDs are still more efficient than blue. The reason we use blue LEDs(well, ultraviolet ones), is that you can change blue to red(and the other colors) with a simple phosphor, but not vice versa.

Oh, and Monochromatic efficiencies are more in the 1/3rd range, not 70%. You also have to account for the power conditioning electronics to buffer output between the solar panels(or nighttime power transmission) and the LEDs. They can be highly efficient as well(90%+), but it's still there.

Your math is about 40 years behind.

I'll give you 1. Which was when we examined the issue.

*They found that their 'traction surface' dropped power production by about 15% compared to the bare panel. That would drop a 21.5% efficient panel to 18.3%.

Re:Good. IndieGoGo should do it too

[funky_vibes]

Surely you can see that idea is a disaster to begin with. I mean, heavy traffic running on and wearing down expensive PV equipment...
Those regions where it would work well are already sparsely populated, and could easily install more efficient PV units next to the road.

Re:Good. IndieGoGo should do it too

[Khyber]

Sayeth the idiot that doesn't know YellowStone Art Museum has a road and parking lot SOLID GLASS.

But hey, a ten second google search would've ensured you wouldn't have opened your fucking mouth to make yourself look like a moron.

All this because Clang went Clunk?

[Applehu Akbar]

More transparency will be a good policy for Kickstarter. It's developing what is essentially a new stock exchange, and in the process is finding out what kind of reporting investors will truly find useful.

Re:All this because Clang went Clunk?

[Mr D from 63]

Regular finance account reporting of how the money is being used should be required. If you can't handle it, don't ask for money.

Re:All this because Clang went Clunk?

[Applehu Akbar]

But KIckstarter, as a new financial market, has the opportunity to take the same innovative approach to the reporting area as it has to investing itself. Can it come up with a financial reporting system that investors will actually pay attention to, rather than toss in a drawer unread? THAT's what I'm looking for here.

Re:All this because Clang went Clunk?

[mysidia]

Regular finance account reporting of how the money is being used should be required. If you can't handle it, don't ask for money.

Such production of reporting and auditing of reports has costs and could consume significant amount of project funds.

It should be up to the backers and an agreement with the backers made in advance, regarding what will be required, not up to some random third party to decide what reporting will be imposed on them both.

Re: All this because Clang went Clunk?

[Anonymous Coward]

The platform which is facilitating the entire process is hardly "some random third party"

Re:All this because Clang went Clunk?

[Anonymous Coward]

stock exchange ... investors

I think you really need to reconsider your idea of what service Kickstarter provides.
Hint: There is no investment going on.

Re:All this because Clang went Clunk?

[Mr D from 63]

Such production of reporting and auditing of reports has costs and could consume significant amount of project funds.

Really? If they are not already tracking costs then they are not managing the development, its an integral aspect that cannot be separated. Reporting financial activities is not hard nor costly. If you can't keep a set of books, don't ask for money (or at least don't ask for a lot of money).

Re:All this because Clang went Clunk?

[Anonymous Coward]

More transparency will be a good policy for Kickstarter. It's developing what is essentially a new stock exchange, and in the process is finding out what kind of reporting investors will truly find useful.

Kickstarter is not a stock exchange. Backers are giving, not investing, their money.

Re:All this because Clang went Clunk?

[arth1]

Regular finance account reporting of how the money is being used should be required. If you can't handle it, don't ask for money.

Or, the opposite: If you cannot handle the risk of losing the money without getting anything for it, don't pledge the money.

Kickstarter is meant to be risky. If there were no risks, the innovators would have gone to a bank instead.

Re:All this because Clang went Clunk?

[Mr D from 63]

I agree, but being willing to take a risk doesn't mean you have to abandon reasonable steps to mitigate it.

Re:All this because Clang went Clunk?

[DerekLyons]

Regular finance account reporting of how the money is being used should be required. If you can't handle it, don't ask for money.

Such production of reporting and auditing of reports has costs and could consume significant amount of project funds.

Nonsense. If it's a serious project, they should already have an accountant or at least some form of accounting software - once you have that, it's pretty simple to produce a basic cash flow report. Regardless of what your business is, tracking the financials is basic to it. If not just to know whether or not you can afford that widget or software package, because come the end of the year you have to let the IRS know. If the project doesn't have financial tracking, it's a sign to run - far and fast.
 

It should be up to the backers and an agreement with the backers made in advance, regarding what will be required, not up to some random third party to decide what reporting will be imposed on them both.

Kickstarter isn't a random third party. As the great-grandparent said, they're essentially assuming the role of the stock exchange - as the middleman and facilitator of the process. Thus they have an interest in seeing that the process is transparent and to some degree regulated. Even for private investment, sans the market, the SEC has rules separating investors into two classes based on their ability to determine and withstand risk. As the arbiter of the market, Kickstarter has similar motivations to protect investors.

Now this being Slashdot, there will be a chorus of people insisting we don't need a middleman or and arbiter... to which I say, go try and raise significant funds on your own sans such a middleman. Then you'll understand why a central marketplace with at least some level of consumer (investor) protection is an idea that has recurred throughout human history. It's a win-win situation for all parties. (And before you rant and froth about Wall Street - I'll point out the problems there are implementation and QA errors, not specification errors.)

Re:All this because Clang went Clunk?

[Anonymous Coward]

How true. A stock exchange in where investor and no share in the profits. Where you cannot resell you sales.

"Essentially a Stock Exchange". Wtf.

Re:All this because Clang went Clunk?

[Anonymous Coward]

I agree entirely. It's something expected of any publicly held business (right?). I know my company is but then again.....it's JPMC.

So, why should it be any different for a project that was crowdfunded? Kickstarter donators are investors. They have a right to see what their money is being spent on and how much of it is being spent, on what.

If that means you need to keep receipts and l2excel, or Quicken or whatever, or hire someone who does, then do it. It's ridiculous that KS has gotten even this far without that being one of the first rules of operation for all projects.

Re:All this because Clang went Clunk?

[Anonymous Coward]

No. Absolutely just no. And to the "If you can't risk losing money waah don't donate" guy below, no.

You're entirely missing the point. It's not even a matter of treating Kickstarter like what it is - an investment. No one who pledges money to KS projects is in it for a profit because there literally is no possibility of monetary gain from doing so.

It's a matter of proving that you aren't full of shit and are actually taking the project seriously. A matter of transparency. There are plenty of projects people would really, truly love to see reports on, and deserve to: Anita Sarkeesians shit, Star Citizen, Kingdom Come: Deliverance, Shaq Fu (which is Indiegogo but the concept is the same). The fact that this wasn't already a rule is completely insane. Any single person or entity that gave you startup money in exchange for a percentage of ownership or anything at all would expect this - simply donating money shouldn't be any different.

Re:All this because Clang went Clunk?

[Anonymous Coward]

Hint: Yes there is.

Except you aren't earning anything, at all, for doing it except maybe a t shirt or beta access or whatever.

invest
invest/
verb
verb: invest; 3rd person present: invests; past tense: invested; past participle: invested; gerund or present participle: investing

        1.
        expend money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property, or by using it to develop a commercial venture.
        "getting workers to invest in private pension funds"
        synonyms: put money into, provide capital for, fund, back, finance, subsidize, bankroll, underwrite; More
        buy into, buy shares in;
        informalgrubstake
        "he invested in a soap company"
                devote (one's time, effort, or energy) to a particular undertaking with the expectation of a worthwhile result.
                "politicians who have invested so much time in the Constitution would be crestfallen"
                synonyms: spend, expend, put in, venture, speculate, risk;
                informallay out
                "they invested $18 million"
                informal
                buy (something) whose usefulness will repay the cost.
                synonyms: purchase, buy, procure
                "they invested in a new car"
        2.
        provide or endow someone or something with (a particular quality or attribute).
        "the passage of time has invested the words with an unintended humor"
        synonyms: imbue, infuse, charge, steep, suffuse, permeate, pervade

Words....they elude you.

Re:All this because Clang went Clunk?

[Anonymous Coward]

It is NOT a stock exchange. It's a pre-order system. That's it.

You do not get any positive return on your investment. At best, you get what they tell you that you are going to get. At worst, you get nothing.

There is no step three for people funding a Kickstarter. There is no profit!

Why the heck have people modded the parent Insightful?!

Re:All this because Clang went Clunk?

[TemporalBeing]

Regular finance account reporting of how the money is being used should be required. If you can't handle it, don't ask for money.

Such production of reporting and auditing of reports has costs and could consume significant amount of project funds.

Nonsense. If it's a serious project, they should already have an accountant or at least some form of accounting software - once you have that, it's pretty simple to produce a basic cash flow report. Regardless of what your business is, tracking the financials is basic to it. If not just to know whether or not you can afford that widget or software package, because come the end of the year you have to let the IRS know. If the project doesn't have financial tracking, it's a sign to run - far and fast.

If it's a small project (not aiming to go big or anything, and I'm specifically thinking about tinkering projects that are looking for under $10k total), then yes the money for the requisite software could be substantial relative to the project costs.

If it's anything bigger, then yes, they should have to do more. Even so, the cost of a CPA to audit and maintain their books could still make up a substantial portion of the costs for projects under $50k.

So as with anything, it needs to be graduated or may be Kickstarter provides some of those services - e.g they provide a Quickbooks account and a team of CPAs to review them and help the projects out unless the project certifies that it can do it on its own with a reference to their hired CPA (which companies would have no problem with) in exchange for a slightly smaller pinch from Kickstarter.

Re:All this because Clang went Clunk?

[Fnord666]

Kickstarter isn't a random third party. As the great-grandparent said, they're essentially assuming the role of the stock exchange - as the middleman and facilitator of the process. Thus they have an interest in seeing that the process is transparent and to some degree regulated.

I disagree. I see Kickstarter as just a middleman that facilitates the introduction between idea people seeking funding and a pooled collection of small angel investors. Like all middlemen, they take a percentage for making the the introduction if it works out, but after that they are not involved.

The issue that I have with this model is that most people throwing money at projects don't understand the amount of risk they are assuming and probably don't have the necessary background to even evaluate that risk. They just see a chance to get in early on some new game/gadget/service without realizing that their prize may never appear.

Re:All this because Clang went Clunk?

[Anonymous Coward]

Such production of reporting and auditing of reports has costs and could consume significant amount of project funds.

Really? If they are not already tracking costs then they are not managing the development, its an integral aspect that cannot be separated. Reporting financial activities is not hard nor costly. If you can't keep a set of books, don't ask for money (or at least don't ask for a lot of money).

GP said auditing, though, not just bookkeeping. That's paying somebody independent to trawl through all your paperwork and make sure you're being honest. That really doesn't come cheap, and at the scale of a typical kickstarter project really wouldn't be viable.

Risk aversion

[i kan reed]

What kickstarter is afraid of, is something that can't be prevented: namely that people will need more money than they think to make something(or worse, that they happen to be scammers). Once the money is gone, no form of contract is going to get it back. And any scammer with their salt will run the money through a limited liability corporation, and pay themselves divdends/salary out of kickstarter funds. Then it can just go bankrupt.

There won't be anything to reclaim legally. So if you're going to back a kickstarter project, you have to do it in a risk-accepting mindset. Which for me, it means I only back projects that create things that I absolutely know wouldn't end up getting made otherwise. For you, that might just mean "no kickstarter ever"

Re:Risk aversion

[ArcadeMan]

Wouldn't limiting the transfer of funds, via signed contracts or something, limit the risks of such a thing happening?

Re:Risk aversion

[i kan reed]

Two problems
1. That creates a lot of overhead. Both for the projects and kickstarter. It makes kickstarter less profitable, and ironically, the honest projects more likely to fail.
2. The projects presumably need the funds to make the things, or else they'd not be on kickstarter.
3. Those that are slowly falling behind on their targets can remain in denial until, poof, the money's all gone. I mean, that's just human nature.

Re:Risk aversion

[Charliemopps]

No, they are trying to prevent themselves from gaining a reputation of being a place that's filled with Scammers. Something that's been well under way for a while now. And, to be honest, I'm not sure how they ever thought this wouldn't happened. As soon as I heard of kickstarter I thought it'd end up going down in flames. I'm rather surprised it's lasted as long as it has.

What they need to do is make clear what your money is for. People seem to expect a lot more than they really get, and need to understand that often what they are really doing is giving the company a "Gift" that may or may not lead to a product the donator is expecting. This is entirely a problem with the expectations of the users, and Kickstarter needs to work to ensure the companies involved can't mislead those users.

Re:Risk aversion

[sribe]

Those that are slowly falling behind on their targets can remain in denial until, poof, the money's all gone. I mean, that's just human nature.

I'd just like to point out that before KickStarter, this exact thing happened all the time, even though angel investors and VCs were far more involved in monitoring the companies they invested in than kickstarter could ever be. So yes, it will happen with KickStarter, no question.

Re:Risk aversion

[i kan reed]

I agree, but there is the distinction that those groups were taking calculated risks, usually hedged with other side bets, where a single big payoff is enough to cover the major failures.

Whereas kickstarter falls somewhere inbetween per-purchase and charity.

Re:Risk aversion

[Triklyn]

my point of view has always been "i'm going to throw some money into this future product. I may or may not see any kind of product if I contribute, but i sure as hell won't see a product if i don't." that's when i really want a product to work out. If i'm just "kinda" into it, i'll just wait for them to release and order it then.

Re:Risk aversion

[Anonymous Coward]

No different from traditional investors. They get a return on their money and hedge their bets by investing in multiple companies. Some will inevitably fail, others will be successful enough that they're profitable overall though.

Re:Risk aversion

[gnupun]

Wouldn't limiting the transfer of funds, via signed contracts or something, limit the risks of such a thing happening?

That's how venture capital is distributed to entrepreneurs, in chunks -- series A, series B and so on. So after completing phase 1, they get $X, after phase 2, they get $Y and so on. This is how Kickstarter should distribute funds to the creators. Otherwise, there is a chance the creators will simply take the money, stop working and give bogus status updates.

When the creators create their sales pitch web page on Kickstarter, they should show how much they want to get paid for each phase. If there are 5 phases and the creators can only deliver 2, the backers will be refunded payment for the 3 unfinished phases.

Re:Risk aversion

[ArcadeMan]

That might be a good idea for people to start doing that right now, even if Kickstarter/IndieGogo/etc themselves don't officially require it.

Re:Risk aversion

[nedlohs]

But then someone has to judge on whether phase X has been completed or not.

Venture capitalists have legal contracts and the all important lawyers for when the two sides disagree on whether the requirements for a phase have been met. Kickstarter is not going to spend that sort of money and effort on each and every project.

Re:Risk aversion

[Anonymous Coward]

The big issue with kickstarter is that backers are not investors. They take only risk, and none of the rewards. I understand the mindset for giving some free money in an almost charity-like manner, but, man, the ones who funded Occulus have been burnt (In French we say "ils l'ont bien pris dans l'occulus, et ils sont pas pres de se rasseoir")

Re:Risk aversion

[Charliemopps]

my point of view has always been "i'm going to throw some money into this future product. I may or may not see any kind of product if I contribute, but i sure as hell won't see a product if i don't." that's when i really want a product to work out. If i'm just "kinda" into it, i'll just wait for them to release and order it then.

Right... the problem is a lot of people expect a lot more than that. They think that someone, somewhere is vetting this stuff, when the fact of the matter is you're giving a total stranger money so they maybe can do something you find interesting.

Re:Risk aversion

[gnupun]

Venture capitalists have legal contracts and the all important lawyers for when the two sides disagree on whether the requirements for a phase have been met.

Right now it's completely a black box how backer money is spent. Maybe the creators should list itemized bills in their Kickstarter project page so backers can see if their money is being spent reasonably. Don't VCs also monitor how their money is spent? I'm not sure.

Re:Risk aversion

[Mr D from 63]

But, smart VCs can impost their own requirements on the project and its management, can monitor all aspects closely and typically can decide to either continue support or cut off funding.

Re:Risk aversion

[NotDrWho]

I've never given to a Kickstarter project and doubt I ever would. For me, the biggest question I would have for such a project is "If your project is so great, why can't you get money from a bank or VC?" If you can't give me a VERY good answer to that question, then you're probably either a scammer or just too lazy to seek out real funding--and either way, I wouldn't give you a dime.

Re:Risk aversion

[sphealey]

- - - - - why can't you get money from a bank or VC? - - - - -

Because not everything in the world is done in expectation of cash ROI? A good indie film will end up being shown at local and regional film festivals (and now, distributed as a DVD to Kickstarter backers). A _really_ good indie film will be invited to national and international film festivals - which will cost the producers money to attend (successful project with negative ROI). How does one obtain a bank loan or VC investment for such an endeavor?

People apparently think Kickstarter and the like are mini Sand Hill Roads, whereas they are much closer to you kicking in $50 to your local community art collective.

sPh

Re:Risk aversion

[soft_guy]

What is so wrong with a project failing? I really don't get it. This is a site to donate money for people to do a cool project. If none of the projects are allowed to fail, it would only be really conservative projects. If you aren't willing to take that risk, don't fund a kickstarter. It is not a shopping site.

Re:Risk aversion

[icejai]

There won't be anything to reclaim legally.

And this is the kicker. The only way contributers/funders can claim a stake/force a refund, is if the "contribution" is structured as a debt. ie. The funder is loaning the money to the company, in exchange for future delivery of the defined product (or collection of products, whichever the case may be for higher levels of funding). If the company goes bust or fails to deliver the product, contributors then become unsecured creditors, and then have a legal claim to whatever assets the group/company has.

The problem with this is the company will effectively be issuing a debt security, which is wrapped with so much securities regulation that it makes this possibility unfeasible. This also makes things going global much more difficult, because each country (or even province, as I live in Canada) has their own regulations regarding the issuance of debt/equity securities.

Not only that, but this means kickstarter must become a registered broker/dealer of said securities in each region they operate (and also in each region of every contributor) in order to operate legally.

Not only that, but each kickstarter project must submit the equivalent of an "offering memorandum", which contains business/operational details that kickstarter-contributors are now asking for.

For these reasons, funders will, and can only be, considered as customers with no legal claim to a bankrupt company that failed to deliver. Not even kickstarter can force a company to give refunds. Even if a company agreed that they would, they could get out of that contractual obligation simply by declaring bankruptcy. So in effect, it'd be an unenforceable policy without teeth.

All kickstarter can do is to improve on their screening process.

Either that, or become a registered broker/dealer in every state/province/region they wish to operate, and streamline the issuance of financial securities for each region of every single contributor... and in the process become subject to the financial securities regulations of each one of those regions.

This is the double-edged sword of financial regulation. They're there to protect the public from scams/incompetence like these (on a scale that's hundreds of times larger than your average kickstarter project), but coming into compliance is extremely tedious and case-specific.

Re:Risk aversion

[gman003]

Often it's too little money for a loan.

I've backed several book printings. The content already existed. All they needed was to go through the proofing process and have enough cash to do a print run. The former, while time-consuming, is fairly low-risk. With Kickstarter's "no money taken until you meet the threshold" setup, the latter is also pretty guaranteed.

But despite it being a very low-risk proposition, banks don't really help with such a project. It's too little money - one had a minimum of $6000, and even the biggest was only $20K. Likewise, who wants to bring in VCs who will try to take over your business (if not just burn it for profit) for a small project?

Really, I think you're wrong in that you think VCs and banks are a good judge of whether a project will succeed. They really aren't, in many cases, particularly for niche fandoms. And they might also not be good for the business, since they inevitably take a large chunk of the profits for themselves. Some of the projects I've backed could easily have self-funded - but they used Kickstarter to make sure there was enough demand for it to be profitable.

I tend to treat Kickstarter as a sort of preorder system, with the caveat that I need some sort of proof that you actually know what you're doing before I will commit. Many of them have successfully done such things before. I kickstarted Exalted 3rd Edition, since the mere existence of two prior editions is a good indicator that they can make a third. I've kickstarted a few games from new creators that had fully playable prototypes (Superhot and Nothing To Hide). Those were riskier, but still a pretty acceptable risk.

I do, however, shy away from any Kickstarter project that will need additional funding - like Clang, which took all that money just to build something they could show to VCs. That's like paying an entrance fee to a casino - sure, you might still hit the jackpot but those are some pretty long odds.

Re:Risk aversion

[sribe]

But, smart VCs can impost their own requirements on the project and its management, can monitor all aspects closely and typically can decide to either continue support or cut off funding.

And yet, what we're talking about happens anyway, which is my point ;-)

Re:Risk aversion

[Anonymous Coward]

Whereas kickstarter falls somewhere inbetween per-purchase and charity.

I assume you mean "in between pre-purchase and charity", which I think is a much more accurate way of thinking about Kickstarter compared to any kind of "investment".

Re:Risk aversion

[sphealey]

- - - - - This is a site to donate money for people to do a cool project. If none of the projects are allowed to fail, it would only be really conservative projects. If you aren't willing to take that risk, don't fund a kickstarter. - - - - -

/\ This

Re:Risk aversion

[Mr D from 63]

Sometimes the result is a complete loss for the VC, but more often they have a lien and can get some recovery, hold the assets for future use, and even get a tax benefit from the losses. Either way, they themselves have a lot more control along the way and many more pathways to recover investment.

Re:Risk aversion

[Anonymous Coward]

A niche product that won't have a good ROI won't ever gain VC funding. This is where crowd-funding may be appropriate.

One example is accessories to non-mainstream board games. In the board game Settlers of Catan, there weren't good storage solutions for all the expansions. The game is nowhere popular enough on its own to convince an established company to invest in the injection molding tooling. Kickstarter allowed a passionate fan of the game pay for the tooling and distribution of just enough product.

In the example, there was a demand, but the market was only just big enough to pay for the investment. Rather than leave an entire market unfulfilled, crowd-funding allowed for a limited distribution of a product to everyone interested. Now that the demand has been fulfilled, the market has shrunk drastically. The ROI was probably in the single digits of percentage. Most companies expect more than that and the opportunity cost of going after the niche market if oftentimes too great for companies to consider this worthwhile.

Re:Risk aversion

[Lumpy]

I have backed well over 30 kick-starters and every single one delivered.

The trick is having a brain when you fund one. Almost every one of the failed kick-starters had a LOT of red flags in the beginning.

Yes this means you need to be educated and smart to be successful in Kick-starter backing.. Just like everything else in the world. The problem is there are a lot of noisy idiots that think that kick-starter is like ebay and they whine loudly.

The stock market is 100% identical to Kick-starter. if you invest like an idiot you will lose everything.

Re:Risk aversion

[SydShamino]

So no good idea ever has been ignored by capitalists (banks, VCs, businesses)?

Re:Risk aversion

[Anonymous Coward]

I've never given to a Kickstarter project and doubt I ever would. For me, the biggest question I would have for such a project is "If your project is so great, why can't you get money from a bank or VC?" If you can't give me a VERY good answer to that question, then you're probably either a scammer or just too lazy to seek out real funding--and either way, I wouldn't give you a dime.

Because not all kickstarter projects are large enough for a bank to be interested in, nor are they expected to return anything of monetary value. I backed a kickstarter that, effectively, sent 2 guys on vacation. They produced a podcast of their trip, it was informative, and well worth the $25 that I spent (And economical, since it would have cost me thousands to be there otherwise). But it was something that never would have happened with traditional backing, nor would I expect it to.

Re:Risk aversion

[Registered Coward v2]

Wouldn't limiting the transfer of funds, via signed contracts or something, limit the risks of such a thing happening?

Possibly, and it is how most non-kickstarter projects are funded. the problem is not in how funding is done, however; it is in KS desire to assume zero liability for failed projects. If they start deciding if a project deserves more funding then they open themselves up to lawsuits when the project failed. By taking a clear hands off approach they protect themselves while still getting their cut. A start would be for them to refund their 5% cut of the raised funds for failed projects.

Re:Risk aversion

[JeffAtl]

Could you elaborate on the kickstarter project? What kind of information were you looking for?

Re:Risk aversion

[omnichad]

Because of the language of "pre-order" that's used in a lot of cases. It makes it sound like a sure thing, when it's really not. It's not a pre-order, it's a gift for funding their project's success (and is contingent on that success).

The last kickstarter I gave to, was in an amount that was below any reward threshold. I just get to know that I did a tiny part in making something I really wanted happen.

Re:Risk aversion

[omnichad]

It's not a purchase. It's not an exchange of money for goods. It's a monetary gift that will hopefully be met with a thank you gift one day. Too many kickstarters are just using the wrong language.

Re:Risk aversion

[NoKaOi]

What is so wrong with a project failing? I really don't get it. This is a site to donate money for people to do a cool project. If none of the projects are allowed to fail, it would only be really conservative projects.

If you aren't willing to take that risk, don't fund a kickstarter. It is not a shopping site.

They are not saying a project must not fail. They are laying out specific requirements for when a project does fail, which essentially amounts to saying project creators must make their best effort to succeed, and if it fails then explaining to backers why it failed, how the funds were used, and refunding any remaining funds if there are any. It seems pretty reasonable to me.

Re:Risk aversion

[Anonymous Coward]

So, it is like giving a hobo $5 and then expecting him to return the favor. Good luck with that.

Re:Risk aversion

[jellomizer]

You are giving money for a project to succeed. You are not giving money for it to fail.

Re:Risk aversion

[Razed By TV]

I would say there is nothing wrong with a project failing. I don't fund a project thinking "failure is not an option."

However, the projects I have had "fail" were not due to problems related to the project. Instead, funds disappeared, with nothing to account for them. Army Men playing cards had its funds disappear, about the same time the creator took a honeymoon. Somehow, he ended up finding the money and giving everyone a refund.
Another fail, still in progress, is the Asylum playing cards. Ed Nash took a lot of people's money and had the artwork for the cards. He never got the cards printed, and has offered very little in explanation for the status of the project, or where the money has gone. A legal case has started against him in Washington state.

In short, if a project tries, and fails, that's one thing. But if it is simply fraud, that is entirely unacceptable.

Re:Risk aversion

[AmiMoJo]

The problem is that Kickstarter allows projects that are very obviously doomed to failure and doesn't act when it is pointed out. They should protect naÃve investors.

There was one recently for an AA battery that can be recharged in 30 seconds. It's basically a capacitor and regulator. People pointed out that at the $20 price point he set for one he couldn't buy any available capacitor that meet his claim of 1100mAh. Worse, he would need to charge at over 150A to get the time down to 30 seconds.

He flapped around, eventually found some surplus 150A power supplies and intends to ship them with the batteries for $20. Some people will probably burn their houses down since he can't possibly afford a descent connector.

People pointed all this out and Kickstarter did nothing. Other projects defy the known laws of physics, or don't even make sense (did you see the "internet battery"?)

Even eBay tries harder to shut down scams and sellers who are clueless.

Re:Risk aversion

[Anonymous Coward]

Venture capitalists have legal contracts and the all important lawyers for when the two sides disagree on whether the requirements for a phase have been met.

Right now it's completely a black box how backer money is spent. Maybe the creators should list itemized bills in their Kickstarter project page so backers can see if their money is being spent reasonably. Don't VCs also monitor how their money is spent? I'm not sure.

Such a requirement for itemization might run contrary to the creators' employees' right to financial privacy.

Re:Risk aversion

[strikethree]

What is so wrong with a project failing? I really don't get it.

There is nothing wrong with a project failing.

The problem is this: How do you determine failure while honestly trying to succeed vs failure due to never trying to succeed (e.g. scam)?

If it was all about projects failing while giving a good honest effort, I do not think many people would mind. They knew the risks and they tried it anyways. C'est la vie.

Re:Risk aversion

[Demonantis]

The boardgame side of Kickstarter tends to work this way too. Most give out a print and play once funded or even before. The Kickstarter pledges are really only needed for artwork, printing, and distribution. There isn't a lot of capital floating around to cover the upfront costs of bring a boardgame to market.

Here is the text

[gnu-sucks]

It's not in the linked article, but here is the interesting part of the new rules: creators have to refund remaining money, and have to post status updates.

Read it here:
If a creator is unable to complete their project and fulfill rewards, theyâ(TM)ve failed to live up to the basic obligations of this agreement. To right this, they must make every reasonable effort to find another way of bringing the project to the best possible conclusion for backers. A creator in this position has only remedied the situation and met their obligations to backers if:

they post an update that explains what work has been done, how funds were used, and what prevents them from finishing the project as planned;
they work diligently and in good faith to bring the project to the best possible conclusion in a timeframe thatâ(TM)s communicated to backers;
theyâ(TM)re able to demonstrate that theyâ(TM)ve used funds appropriately and made every reasonable effort to complete the project as promised;
theyâ(TM)ve been honest, and have made no material misrepresentations in their communication to backers; and
they offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.

Re:Here is the text

[Rinisari]

Which means that nothing has actually changed. They're just codifying the cultural practice that was already in place:

• No projects are guaranteed to deliver
• Show that you used the funds appropriately
• Give prorated refunds
• You may get sued at any point

Changes nothing

[guytoronto]

The T&C still gives creators a way to hold onto the money. Kickstarter has just shuffled some words around to make it appear as though they have some kind of control. Kickstarter is weird. People throw money at an unproven idea with literally zero chance of financial reward.

Re:Changes nothing

[JaredOfEuropa]

You pay for a product that might otherwise not see the light of day. In some cases it's worth the gamble, and I've gotten a few useful products through crowd-funding.

For some projects, I'd be interested in getting a slice of the company (i.e. a chance at financial reward) instead of the finished product in exchange for my contribution. But I suppose there might be a lot of extra legal requirements for such a scheme.

Re:Changes nothing

[swb]

Maybe it's just me, but it seemed like Kickstarter sort of started out as a way to get simple things out of the garage and into real products. The kinds of things too simple to really be considered big-picture tech startups that would attract VC or be easily salable to traditional financing.

Now it seems like there's a lot of things on there that fit more into a conventional tech startup. It's great that Kickstarter can raise the money, but maybe there need to be transparency and reporting when you're talking millions of dollars.

Re:Changes nothing

[nedlohs]

How is that wierd?

People throw money at things like "ALS research" with literally zero chance of financial reward.

And I'm sure someone somewhere has managed to ebay something they got on kickstarter for more than they paid for it. So though amazingly small there's probably a non-zero chance of financial reward.

Re:Changes nothing

[SydShamino]

My Kickstarter edition of Euphoria: Build a Better Dystopia was $49. Since it arrived just after we had a baby, I resold it at a flea market, new in shrink, for $140.

Re:Changes nothing

[nedlohs]

Yeah, board games was the domain I thought of - though I was thinking of something more like Ogre.

think globally

[hjf]

Hey Kickstarter,
When are you going to make your service available worldwide? Why is your service only available for the US & allies?
You've been in the game for years and you haven't even tried to go outside.

I refuse to support projects based on this bullshit policy. When I see that someone in a developing country actually has a chance to raise funds for his invention I'll believe you. But when I see that someone can play with the system and raise funds for "potato salad" just for being a US citizen, well, FUCK YOU kickstarter.

Like all your web 2.0 friends: You suck.

Re:think globally

[i kan reed]

They also said in this update that some TOS changes were intended to allow the legal operation in new countries...

So while this isn't off topic, it's delightfully ironic in its level of not reading TFA.

Re:think globally

[hjf]

"I'll believe it when I see it".

And, no, "other countries" being "The nice part of the EU" is still bullshit.

When I see someone from India, Bangladesh or Cambodia being able to raise money I'll believe it.

But... you know... those people are dark skinned... there is a high chance that they'll be scammers. Better stick to the white part of the world where everyone are good citizens and obey the rules.

Re:think globally

[DNS-and-BIND]

I love how the default attitude is spite. Blame America for doing something wrong, instead of the obvious choice - make your own version of kickstarter. With blackjack, and hookers. Then you don't have to listen to what the Americans say at all. Better yet, you can exclude Americans from participating. You can even go so far as to redirect any American IP address to a landing page where you let them know all the problems you have with the US federal government.

Kickstarter doesn't do deals outside the USA for well-known legal reasons. Maybe you can discover what these are when you start your own - but you won't, so the question is moot. Still, I wish someone would. I just don't see it happening, though.

Re:think globally

[Ol Olsoc]

But... you know... those people are dark skinned... /p>

Way to go - Amazing the things people will play the race card about.

I'll bet you are really pissed that there aren't any brown Skittles candy.

Re:think globally

[Xest]

I had some sympathy for your point until I saw your homepage is an Argentinian domain name.

Do you really think it's smart for Kickstarter to setup in a country that's defaulting on a national level and whose currency is so volatile as a result?

This story is about Kickstarter trying to reduce the chance of financial loss to backers, if ever there was a way to do the opposite and instead further increase the chance of loss then setting up in a country with the financial instability of Argentina would be it.

Re:think globally

[rjstanford]

You could even use Kickstarter to finance the building of Kickstarter's replacement, were you so inclined.

Re:think globally

[Anonymous Coward]

The reason is because the lawyers at Kickstarter are most familiar with the laws and taxation structure of the USA, Canada and other similar regions. When they get around to understanding the laws of other developing countries, the service may get expanded.

Re:think globally

[houghi]

Hello, I have a project here in Nigeria and am asking for your help ...

Re:think globally

[omnichad]

Right....because complying with trade regulations of every country should just be automatic, and not based on the growth of the company.

Re:think globally

[Anonymous Coward]

If you want to be that mad about something, try being mad that whatever random country you're from hasn't made itself a platform like this. It's not like it's hard to copy. There are lots of clones in the US already.

Or, you know, you could recognize that anything involving investment in a project is going to involve dealing very carefully with regulations, and even more so when you're crossing international boundaries. It's not "US & Allies" that have access, it's "countries with the types of western legal system the creators have the most experience with".

Re:think globally

[dgatwood]

I know this one. It's something about the rightful beneficiary of the estate of Prince Akeem Joffer.

Re:think globally

[Anonymous Coward]

Differences in laws between countries produce tremendous barriers to registering users internationally, even if you're not collecting money on the site. Kickstarter has been growing while operating in its original market: why ought they have expanded faster?

Re:think globally

[hjf]

Oh, sure. Myself, alone, I am responsible for my country's monetary policies.

Are you retarded or just plain fucking retarded?

Re:think globally

[hjf]

Or, you know, I could use Indiegogo which doesn't have bullshit 'USA ONLY' policies.

BTW: Why are all americans so sensitive? A foreigner says "US" and you all bitches start squealing like pigs. What the fuck is wrong with you? Did I dare insult your beloved country? What a douchebag.

Re:think globally

[Xest]

No unlike you I understand economics. It doesn't matter who is or isn't responsible for your country's situation, the fact remains that you have no control over it and your government is not improving the situation. Whether you like it or not that makes lending to your country an extremely risky proposition and if professional investors with the wealth of information they have available feel that your nations credit worthiness is junk then individuals with less knowledge of the risk should be protected from that too. If you want start up funding then move to a country with financial stability where it's safe for investors to invest, don't bitch at others for not setting up in a place where it's far too risky to do so.

This is a fact of living somewhere with poor financial management, that's defaulting on debt repeatedly, and has been stealing foreign assets. I know it's not your fault, but it's not Kikckstarters either so you can't blame them for not being willing to face the risks your country has created for itself. You may have a good idea, you may have good financial management, but whilst your government could tank your investors money over night it's not fair to ask them to take such a massive risk.

Re:think globally

[hjf]

You're mixing everything up right now.

I DO NOT support my government. I didn't vote for this woman, and I suffer her retard policies every day (did you know we, Argentinians, can't freely buy foreign currency anymore? Did you know that we can't even RECEIVE MORE THAN TWO PACKAGES FROM ABROAD A YEAR?).

That said: I support what the government is saying. We're not in a "voluntary" default. The truth is that NML capital bought Argentina's debt for a mere 80 million dollars, and it's worth over 1 billion right now. The truth is that 92% of creditors accepted a restructuring: Argentina agreed to pay back 100% of capital AND 300% in interests. NONE of the people who entered the debt restructuring are losing money. So when you hear "Argentina is paying only 25%" that's twisted: we're paying 25% of the riduculously high rate we had to take money for, but we're paying back in full AND paying enough interest.

A 1000% return is too good to be true. And in this case it was.

NML capital sued. And the juge ruled we had to pay in full, right now. The problem is that if we do, there's another 20 billion more in debt we have to pay to the other holdouts. And also, if we pay any of them, the "pari passu" clause is triggered and argentina's debt restructuring is destroyed. We're back to square one, with a debt of over 200 billion dollars again.

You know why this is bullshit? Because this is NOT how it works anywhere else. If someone owes you and goes bankrupt, and if most other creditors agree with the restructuring, you're forced to accept it. In fact. the IMF wanted to make this true for all cases, but they were ignored. The UN passed a resolution about this (and guess who rejected it? Two countries, one of which was the US).

What also happened is that Argentina "was declared in default" even though we made the payments - except there was this slight problem: a US judge blocked the payments EVERYWHERE - even European citizens were affected by this. So we're in default because a US judge decided so. Not because we want to.

Want to make this more dirty? The "default insurance" was paid, and then it was decided that Argentina wasn't really truly "defaulted". So, thanks to this judge, a few people made a lot of money in a single day.

So yes, you don't really understand economics. Argentina's problems aren't caused by our unwilingness to pay. Griesa could have "delayed" his ruling by just 6 months and Argentina would have been able to negotiate with NML. As things stand, there's not much we can do. If we "negotiate" anything with NML, the whole restructuring thing goes to hell. Now, why did Griesa rule now? Why couldn't he wait? Why didn't Obama stand up for Argentina after he said he would? (because he's afraid of Paul Singer)

Yes, we get into dirty US Foreign policy right now. Argentina is doing something the US doesn't like, so the US uses their economic resources to tame us. Try and see the world with a more cynical eye and you'll see that everything isn't that fair, and that the US doesn't play nice.

I have no idea what you mean by "stealing foreign assets".

And as for kickstarter: they only work with 10 countries. Indiegogo works in over 200 countries. The whole point of my original comment was that KICKSTARTER doesn't want to work with US & buddies. You made it all about debt and all other irrelevant bullshit.

Re:think globally

[hjf]

Indiegogo works in over 200 countries and it's also US based. Your point is bullshit.

Re:think globally

[Xest]

I'm not mixing anything up, on one hand your saying you don't have control over your government including currency controls and on the other you're asking people to send money in. You don't seem to realise that the former creates much greater risk for those doing the latter.

I'm not blaming you for the actions of your government and I do sympathize with how it effects people like you but my point stands that it's not the fault of others that they won't take the risk your asking them too either - it's wholly on your government.

You say they only borrowed 80 million, but here's the thing, why did they borrow it in the first place with such ludicrous terms? However your government may wish to spin it you simply cannot take money under some terms and then suggest you should have the right to renege later on without there being consequences.

As for stealing foreign assets in taking about things like nationalisation of Spanish oil forms without proper compensation - if you do this stealing billions of assets off people then why are you surprised that a judge wold take a hard line in holding you to your agreements elsewhere? You can't run a country by taking money and assets and not living up to your on obligations. If you do then you'll be seen as a risk and people like you won't be able to get startup funding from investors that they're asking for.

Re:think globally

[omnichad]

How safe one company operates vs. another is not a counterpoint.

Re:think globally

[hjf]

I didn't say we borrowed 80 million. NML bought the DEFAULTED bonds for 80 million. They bought worthless papers, from someone with terrible credit. And they sued, to collect 100% payment.

That's NOT how it works, man. On one hand, you have the "free market" buying and selling, and on the other hand, you have a judge ruling on the price of bonds. WTF? Let's put it another way: Why should Argentina pay a lot more interest than, say, Germany? Because there's a chance that Argentina won't pay? Obviously not. Since a judge can order you to pay in full.

As for Repsol, Argentina has paid for it already. The clown we have for minister of economy said, at one point, "Repsol won't receive a single cent". Then he, himself, negotiated something like a payment of 6 billion dollars for it in bonds (when the valuation was estimated in 5 billion). This was criticized because he overpaid. They did this to allow Repsol to sell the 6 billion in bonds for an estimated market value of 5 billion. (In my opinion, Argentina should have paid Repsol what repsol paid to the Argentinian government in the 90s for YPF: One Dollar. In fact, make it 10. Make it 100. Hell, let's make it 1 million dollars - man, that's a great return: pay 1 dollar, do nothing, then get paid 1 million 10 years later!)

The problem with Repsol is a lot deeper and it's only part of the problems with private investment in Argentina. Especially in the privatization business that happened in the early 90s. Argentina recently "found" an oil field, Vaca Muerta. I say "found" because it was known about for decades. In all these years, Repsol never bothered to exploit it. They simply used the existing wells and tapped the "easy" oil. Argentina's energy demands were higher than that so we import a lot of fuel.

Another case is electricity. In Buenos Aires, Edenor and Edesur exploited the already existing grid. They did not invest anything in over 20 years. Last summer there was a blackout that left a neighborhood without electricity for over a week. Edenor said it's because of Argentina's import restriction policies. The truth is, over 10 years ago, before any restrictions, a similar event happened. An entire neighborhood without power for over a week. So Edenor claims it's because the Argentine government has "frozen the cost of electricity". It's bullshit again, since Edenor/Edesur both receive several hundred million dollars a year in subsidies.

Then there's the telephone communications business. ENTel was split into two (Telecom+Telefonica) in 1990 or 91. For several years the situation didn't improve - at all. Until they started replacing the lines. Then it was great: service was excellent (in most cities), and it Just Worked. ENTel is remembered because of its terrible service (actually most of it was self-sabotage by their own employees who had been told if the company was privatized they'd get higher salaries - oops, most were fired).

Aerolineas Argentinas is the best example of this too. Aerolineas owned over 20 planes, 3 simulators, dozens of buildings across the world (in airports and outside), employeed thousands of people, and operated at a loss of about 1 million dollars a year. It was privatized. After 10 years of privatizations, Aerolineas leases all its planes, owns no simulators, liquidated most of their buildings, employs hundreds (not thousands) of people, and.. it operates at a loss of over 1 million dollars a year.

I could keep giving you examples here, but it's not needed. The pattern is pretty clear here: Own a privatized company, liquidate everything you can, and funnel ALL earnings outside the country. If the company needs some sort of investment, you only do it if it's critical (like Telecom, who could simply not operate because the lines were in terrible state), and all investments you do through a loan taken in Argentina and paid in Argentina (and then not pay it, take it to an extreme situation, and threaten to fire all employees. Then they go out to the street, protest, and the government takes care of the d

Re:think globally

[hjf]

Dude, in the end, you give money to a stranger. It can go right, or terribly wrong. And you're only lending a few bucks.

The point i'm trying to make is this: America is "the land of opportunity". Anyone there can start a business easily, make it grow, get rich. You can actually get some sort of loan (are you telling me you can't get a $5K loan from your bank?). There is a big advantage there.

In the rest of the world it's definitely not like that. Someone in the Philippines can't just start a business, and expect it to grow. You can't easily take a loan (and if you can, the sum is ridiculous and the interests are sky high). Third world countries run at a huge disadvantage.

The problem is pretty obvious here: you're serving people who don't really need the money. It's just a convenient place to do it (and I bet sooner or later banks will be suing Kickstarter for "providing financial services without a license"). What these kind of sites need to do is work outside Comfortable America and do something worth doing.

You know what disgusts me the most? A random idiot in the US can start a kickstarter project for "potato salad" in the US and get millons thrown at him, for fun. While some farmer in india has to go through all sorts of processes to get a "microcredit" (a $50 loan) from some agency, AND THEN he has to pay that $50 back + interests. Come on.

Re:think globally

[Xest]

You're blaming everyone else for your country's woes, but it ignores the fact there are other countries, including some of your neighbours that have turned things around. You seem set on the idea that everything that's been told to you by your media/government is correct and that everyone else is at fault and Argentina is just one of the world's victims- why is Argentina one of the world's victims? Chile turned itself around after Pinochet incredibly well, Brazil is now one of the top 10 global economies. You have success on both sides of you, and yes you have nations less successful next to you too, but you and they might want to consider how others have succeeded whilst your countries have failed.

Worse, Argentina was actually on the up until Kirchner decided to resort to the most vile form of politics there is - nationalism. She started roaring off about the Malvinas again, started nationalising foreign firms, and started refusing to service debts and you tell yourself this is okay because the other guys were just as corrupt, but it's not - it's the sign of a politician who is out of ideas, out of her depth, and desperate.

Your country can and will change, just like your successful neighbours have, the question of when is entirely down to when you decide to start finding decent political leadership.

As an aside you asked the question, what is the point in higher bonds if you can be ordered to pay them anyway? - I can answer this, you're being ordered to pay them by a judge, but you don't have to, the alternative is default, and if there's a chance you'll default then the bonds have to be higher to cover that risk. If Argentina declares itself default and bankrupt then it can opt not to pay, but then the price of bonds will increase even more - it's the choice your country has to make, either give up borrowing from elsewhere and default, or continue to want to participate in the world bond market and pay what you legally owe no matter how high and unfair that might be. Risk comes with a cost, and if you're a risk you must accept that cost or patiently work hard to stop being a risk.

Re:think globally

[hjf]

Error, I'm not blaming others for the problems of my country. I am 100% convinced that ALL of my country's problems are caused by CORRUPTION. But as I stated earlier, whenever we try to do something about it, it's questioned as if it was a totalitarian regime move. In the meanwhile, companies continue to be emptied.

As for the other countries: keep in mind that:
1. Brazil may be in the top 10 world economies but their social problems are way greater than Argentina's. Look at the distribution of income and you'll see only a few "extremely rich" people skewing the total percentage.
2. Chile has a lot of natural resources and their economy is simply based on exporting, basically, copper. Chile has more mines than Argentina (because of their geography) and only 1/3 of the population. Do the math.
3. Chile doesn't have a public university system. Thousands of their students come to Argentina to graduate here.
4. Bolivia and Paraguay don't have any serious public health system. Their citizens come to Argentina for treatment. For free.
5. Argentina has ENORMOUS shantytowns with populations that sometimes reach 40% foreigners.

It's very convenient to be a neighbor of Argentina, since we take care of your people for free. Due to "human rights" associations it's impossible to even put this issue up for discussion. You're called simply a RACIST if you talk about charging foreigners for healthcare or education. And only now someone's been talking about deporting criminals...

As for paying what we owe, well, I see this as a sacrifice. You see, you say the consequences of a default are worse. This isn't true. If Argentina pays now, we're forced to pay $200B more - money Argentina doesn't have, and can't borrow, and yes, it will be a REAL default with REAL consequences. The only thing we can do is wait in a "partial default" until january and negotiate then, after the RUFO clause expires. It's pretty obvious the government is doing all this loudmouthing now, but they will be paying in january. Let me explain again: Argentina, right now, CAN NOT pay. Our central bank reserves amount only to $28 billion.

The solution for argentina's short term economic probems is simple:

Wait until january and pay the debt.
Take a huge loan, to be used to develop the very needed:
- roads: there has been a project to do this for over 20 years - it even includes eliminating all toll roads
- railways: Argentina has over 35.000km of railroads of which only about 1700km are active
Eliminate "social aid" programs in a period of several years. Starting with men in working age. If they can't find a job, they should be assigned to building the roads or railways. Then continue with women - hundreds of thousands of "cleaning ladies" quit their job once they started getting government aid. There is now a shortage of this service.
Eliminate the shantytowns, deport all illegal immigrants (maybe with an amnesty for those who can prove they've been actively working in the past years and not just "living here"). Relocate all Argentinians to their original cities.
Forced labor for prisoners: in Argentina, prisoners actually get government aid for being in jail AND their wives too. This needs to be eliminated. Prisoners oughta work cleaning the sides of roads or whatever.
Instauration of the Death Penalty. Criminals have turned extremely violent in Argentina - high profile rape and murder cases are in the news every day. Lawyers say we can't do this because we are subscribed to the Costa Rica treaty - Interesting: Argentina is a sovereign state when it comes to not paying debts but apparenly we can't unsubscribe from a treaty.
Reinstauration of conscription. There are now MILLIONS of youths that left school and never had a supportive family (a consequence of indiscriminate social aid). This is a time bomb, and crime rates are expected to soar to incredible levels because of these people.
These are just a few points. I could go on for days about this. But sadly, for all things to happen, what Argenti

How to refund if the money's gone?

[TranceThrust]

From TFA (since the slashdot `summary' does not specify any of the new rules): ``[upon failing,] creators are expected to explain what is happening and how the money was used, giving refunds to any backers who request them.''. Now, if, for example, MyIDkey `burned through' 3.5M$ of backed money, then how would those who backed it get a refund? The money's gone, period. The kind of risk is inherent to these kind of fundraisers.

Re:How to refund if the money's gone?

[hjf]

I think the whole concept is plain bullshit.

You're risking your money. Period.

There should be no guarantee that, if the project fails, your money will be returned. What the hell? That's not how real life works. Ask any of the dot-com investors if they got any of their money back.

How is this any different from eBay where you could order an iPhone 6 PLUS, and get a brick in a box instead. And there's nothing you can do about it.

Re:How to refund if the money's gone?

[TranceThrust]

Precisely. The eBay thing is a bit exagerrated though; there is buyer's protection that works (I've had to used it myself). It is a rather abitrary process, though: I could take the iPhone, but in a brick, and then start complaining they sent me a brick. It's based on perceived trustworthiness, as should be backing a kickstarter.

Re:How to refund if the money's gone?

[jythie]

When dot-coms go bust their investors are one of the groups that get a cut of the assets from liquidation. They are unlikely to get all their money back, but there is a legal process that results in them being in line for whatever is still there.

Re:How to refund if the money's gone?

[ArcadeMan]

The concept is sound, depending on the project. Sometimes the person/team already has a working prototype and only needs the funds to be able to manufacture the item in larger quantities at a lower price.

As an example, The Link was a very successful project. And the end product is exactly as described and works as well as any other huge commercial corporation would have been able to produce.

Other Kickstarter projects, however, such as those "We need two million to make a game" where the team only has one guy who knows photoshop and has an idea for a game, and another who knows how to make music but no programmer at all, you usually need to steer clear of those.

Re:How to refund if the money's gone?

[Anonymous Coward]

Actually there are things you can do about it, depending on where you live and where the sender lives.

For instance, I've only ever not gotten what I've ordred from ebay once. In this case I had ordered a hard drive, and while not a brick I recieved a rock in the mail. At the time neither paypal or ebay were very helpful, so I tried contacting the USPS (when talking to them, they considered this mail fraud), less than a week later I had recieved a refund from the person via paypal.

Re:How to refund if the money's gone?

[Anonymous Coward]

There should be no guarantee that, if the project fails, your money will be returned. What the hell?

The project can fail for multitude of reasons - talent/human resource leaves the project; cannot get license/royalty agreement with potential partner; someone else working in parallel releases a product covering the same usecase/concept. In such cases, the funds are not completely used up and must be returned to the backers.

Re:How to refund if the money's gone?

[Anonymous Coward]

These aren't investors though. Investors receive equity for their investment. Kickstarters receive a promise and warm feelings.

Re:How to refund if the money's gone?

[Anonymous Coward]

That's easy: Wouldn't they just start a "Refund MyIDkey backers" kickstarter project?

Re:How to refund if the money's gone?

[Anonymous Coward]

pennies on the dollar if that much

Re:How to refund if the money's gone?

[Ol Olsoc]

I think the whole concept is plain bullshit.

You're risking your money. Period.

There should be no guarantee that, if the project fails, your money will be returned. What the hell?

This is what happens when people don't understand venture capital. If an investor needs security, they need to invest in other things.

Did these people think that investing in Kickstarter projects was going to be like buying a CD? A whole lot of this stuff is going to fail.

Yes, but:

[Monty Worm]

This is useful, but

I've backed a project that's currently been running late. Like 18 months late. Updates are random, and while follow-ups are promised, they don't happen in timing promised ( https://www.kickstarter.com/pr... )

Big question is how do we deal with a zombie (dead, but not admitting it) project? According to the previous project, all backers seem to be entitled to refunds, but there's no mention in this post as to even how to flag this for KS staff.

Time to make a better alternative to Kickstarter

[Thanshin]

I could be the man to make that alternative! I will make "CollectiveProduction" or CollProd!

If only I had some money to start my project...

Unfulfilled

[Jonifico]

Well, everyone who puts money on some stranger's project knows they're running a risk with it, but they expect it to deliver at some point. Just make sure you're not kickstarting with the money to pay the kid's college and you'll be alright.

honest vs dishonest failure

[Anonymous Coward]

I don't mind backing a cool looking project on kickstarter and having it fail IF it was an honest attempt. If those involved believed in it, were into it, and things just didn't go according to plan, or it cost more than they figured, or they couldn't pull it off for whatever reason, or it was more complex than they figured... I'm cool. Shit happens, and in the end we'll still get some awesome stuff done.

But there's a real risk that kickstarter could end up being ruined by scammers, fakes, and overcommerialization. The reason I back stuff on KS is because I want to fund the little guys. Indies, small teams making stuff that big studios won't because it's "too niche", or "can't be sufficiently monitized".

I don't know how to keep the good bits of KS without the assholes ruining it, which seems to be the problem with a lot of things.

Re:honest vs dishonest failure

[Ol Olsoc]

But there's a real risk that kickstarter could end up being ruined by scammers, fakes, and overcommerialization.

In other words, venture capitalism.

The reason I back stuff on KS is because I want to fund the little guys. Indies, small teams making stuff that big studios won't because it's "too niche", or "can't be sufficiently monitized".

You are half way to being scammed. Little guys, indies, whatever they use to help sell you on their trustworthyness, That's part of what they are trying to sell you. Its a noble sentiment. But in investment, nobility has no place. They are there to make money, and that's it.

I don't know how to keep the good bits of KS without the assholes ruining it, which seems to be the problem with a lot of things.

You can't. People run the whole range from saints to assholes, and in the world of money, the assholes are pretty much ruling. If a person is concerned about things like ethics, or not doing harm, they won't make as much money compared to a person who is willing to do whatever it takes to increase their wealth.

Re:honest vs dishonest failure

[Anonymous Coward]

You are half way to being scammed. Little guys, indies, whatever they use to help sell you on their trustworthyness, That's part of what they are trying to sell you. Its a noble sentiment. But in investment, nobility has no place. They are there to make money, and that's it.

(Same AC here): of course they are there to make money, but I don't believe "that is it". Well not always. I back games on KS. Many of the small guys are doing it because it's a passion. It's what they love to do, and from what I've seen a small team of 5 or 10 programmers and artists will make a game 100X funner than anything EA has churned out in recent times.

So yes, those 5 or 10 people need and want money. They have to eat and pay the rent! But you know, I'd MUCH rather fund them than the giant corporations that are squeezing the soul out of gaming, making singleplayer games be online-only and DRMed glossy grindfests. I'd rather have one good indie RPG than a million craptacular games like Skyrim. Even if 9 out of 10 of the KS projects I back fail or don't produce what I hoped for, I'd still rather send them my $$ that than give a single penny to Bethesda or EA or any of the other soulless companies that have run gaming into the ground and made it become Hollywood 2.0.

Re:honest vs dishonest failure

[sphealey]

- - - - - - You are half way to being scammed. Little guys, indies, whatever they use to help sell you on their trustworthyness, That's part of what they are trying to sell you. Its a noble sentiment. But in investment, nobility has no place. They are there to make money, and that's it. - - - - -

It is not a well-received topic in Chicago-school microeconomics, but there are other human motivations besides desire to accumulate more personal wealth than anyone else (pure greed), and other rewards besides cash ROI. Kickstarter contributions are not "investments" in any meaningful sense and do not operate the same way that venture capital placements do. If you can't see the difference you probably shouldn't be contributing to the former or investing in the latter.

sPh

Re:honest vs dishonest failure

[Ol Olsoc]

Kickstarter contributions are not "investments" in any meaningful sense and do not operate the same way that venture capital placements do. If you can't see the difference you probably shouldn't be contributing to the former or investing in the latter.

sPh

You are saying they are charity? In other words, giving money away?

So why on earth would anyone complain about anything? You gave the money away, you are not going to get anything back. The results of success are the same as the results oif failure. Why would you care then?

Re:honest vs dishonest failure

[sphealey]

I'm not complaining. You are: you are asking that the standards applicable to investment banking and venture capital be applied to what is intended to be the donation box at the community art collective where you take your kids for pottery lessons.

sPh

Re:honest vs dishonest failure

[Ol Olsoc]

I'm not complaining. You are: you are asking that the standards applicable to investment banking and venture capital be applied to what is intended to be the donation box at the community art collective where you take your kids for pottery lessons.

sPh

And it would appear that the folks at kickstarter are responding to a whole lot of people doing the same.

It's like I said, if it's just a donation, then no complaints allowed.

And yet, they are changing the rules. Apparently you might be the outlier in this. So why don't you write to the Kickstarter folks and tell them they can't do what they are doing.

Kickstarter isn't about financial reward

[Overzeetop]

Financial reward isn't the goal of kickstarter backers. Never has been.

Re:Kickstarter isn't about financial reward

[Anonymous Coward]

and you're a shit-stain with the reading comprehension of a cockroach.

Re:Kickstarter isn't about financial reward

[Anonymous Coward]

More than that - it *can't* be.

Kickstarter has structured things such that backers are technically giving a donation to the project. The rewards are technically pledge gifts - like PBS tote bags. The reason for doing this is that the SEC has very stringent rules for investors and the companies they are investing in, which would mean that if Kickstarter backers were to be classified as "investors", most of the projects (and backers) on Kickstarter would be disallowed from contributing.

By classifying things as a "donation", however, Kickstarter gets around most of the SEC investing rules. But the flip side of this is that backers can't really have any financial incentive for the thing they're backing - because if they did, they're no longer "donors", they're "investors". Technically, all the things Kickstarter is doing to incentivize project complement are being done from the contractual-obligation-to-Kickstarter end of things, rather than a legal-duty-to-backers point of view. As long as they send you your tote bag (and possibly even before that point), projects have zero legal obligation to backers.

If you don't realize that - if you go in to Kickstarter thinking that projects have some (legal) obligation to fulfill their project goals - then you shouldn't be "investing" in Kickstarter projects. Any money you give on Kickstarter should truly be thought of as a donation - you think the project is cool, and you want to (possibly) help make it happen. But if it doesn't, you should be alright with waving bye-bye to your money.

Re:Kickstarter isn't about financial reward

[gnupun]

Not sure why parent is modded down. In many cases, the company making the product using Kickstarter gets a zero-risk, zero-interest loan without selling part of its company to VCs or banks. That's a huge deal, because if the company used VCs for funding, a portion of their profits would go to the VCs. So if they made $1 million profit, perhaps $400,000 would go to VCs. With crowdsourcing, once the company has delivered the product to the backers, they get to keep all $1 million of those profits for themselves for any future batch of products sold.

Also, Kickstarter makes a nice commission by being a middleman for backers and creators. So yes, it's all about the money.

Re:Kickstarter isn't about financial reward

[Anonymous Coward]

Money-grubbing VCs, Wallstreet, and congress-critters can't wrap their feeble brains around this simple concept. Sometimes it's important to just explore.

Re:Time to make a better alternative to Kickstarte

[ArcadeMan]

Yeah! We'll make our own Kickstarter! With blackjack and hookers!

Nothing new

[argStyopa]

Nothing is new under the sun.

The same ancient rule still applies: Caveat Emptor.

If you throw money at someone with no contractual guarantee in return, there is simply no protection for your money. It's still your money - throw it at whomever you want. But don't expect sympathy because you "lost" it if the person wastes it, eats it, or somehow fails to execute what they said that that would.

As kickstarter started generating large sums of money the conmen and shills naturally have taken notice.

Contribute for fun; accept the risk

[sphealey]

People should identify Kickstarter projects out of interest, enjoyment, or just a sense of fun, and contribute no more money than they would be willing to use as kindling to start a campfire. If you contribute $25 in hopes of seeing an indie film completed - great if it does, sad if it doesn't. If you contribute $100 hoping to get a new piece of hardware, don't expect anything other than some p% chance that you will ever receive that hardware or if you do it will work as dreamed. If you don't have the money to lose, don't contribute.

One innovative and clearly risky hardware project I backed has people complaining that the base product shipped 2 months later than planned (hoped) and the premium product will be 5 months late. Um, guys: it was risky. There were commercial alternatives available at 10x the price. You knew that this was an attempt to create a mini-breakthrough, but you're griping because it was 2 months late and the associated app will need some point revisions? Get real.

sPh

Re:Contribute for fun; accept the risk

[nine-times]

Agreed.

Even if they have a great idea and the best of intentions, the people running the project may not be successful. Running a business is more difficult than most people imagine, and it may be even harder to run a business with discipline after receiving millions of dollars in free money, donated with no strings attached.

When you donate to Kickstarter, you are neither making a purchase nor investing in the business. You're making a donation.

Re:Contribute for fun; accept the risk

[OzPeter]

People should identify Kickstarter projects out of interest, enjoyment, or just a sense of fun, and contribute no more money than they would be willing to use as kindling to start a campfire.

In such a case you have now given the people running the kickstarted campaign free money with no responsibility to deliver anything. That in i itself would be a guiding beacon to all and sundry scammers to use Kickstarter as a huge legal loophole.

Re:Contribute for fun; accept the risk

[Triklyn]

:) if i had mod points sir, you'd be getting them.

Re:Contribute for fun; accept the risk

[Anonymous Coward]

shipped 2 months later than planned (hoped) and the premium product will be 5 months late.

Wow, only? There was one project I backed near end of 2010, it was assumed it would take less than year. I got it like a month ago. Not that I really hold it against the author tho, especially since he got pretty screwed by his partner who ran with quite a bit of the money.

Screening process

[MindPrison]

They should improve their screening process.

Also, it's important to consider that funding a kickstarter project, is kind of like investing money in the lottery or purchasing one of those scratch lottery tickets. You may or may not win, the likelihood of actually winning is bigger than the lottery, but in reality very small, it's like going to the casino and betting it all on one of 3 rows.
Kickstarter is a gold-mine right now for scammers as well. All you need, is a well thought out plan to CONvince a lot of people out there, and since most people aren't very technical...this isn't hard at all (thus, why we need a better screening process). Many of the funded projects gets WAY more than they asked for, and then GREED grabs them...they lack no skills when it comes to find a reason to use the extra money, and have you noticed how certain products doesn't get cheaper for the public even thought they receive MASSIVE support?

Money baby! It's the shit.

Re:Screening process

[JaredOfEuropa]

How does this work in Kickstarter? You'd think the campaigners should receive only the amount they initially sought, with maybe up to 10% extra if the pledged amount exceeds that. Once the first backers receive the product, the rest of the funds can be released to fulfill those orders. And if there's a cost overrun, the 2nd tier backers can be given the opportunity to pull out or let their money ride, after which the project can receive additional funding from the remaining backers. That way, the projects are encouraged to spend sensibly, and are required to provide a solid explanation in case they go over budget.

Re:Screening process

[Anonymous Coward]

There are a lot of kickstarter projects that are well researched and involve people with a lot of experience in their industry. You don't have to throw money at the risky projects, but all three that I've participated in have been successful.

Re:Screening process

[Anonymous Coward]

That doesn't allow for the common scenario where the creators state that additional money they receive will be spent on making the project fancier, longer, prettier, or whatever may be appropriate for the type of project it is. Sure, if we're talking about a project that's selling some physical good that would need manufacturing that might be sensible, but that's a pretty small proportion of kickstarters.

Re:Time to make a better alternative to Kickstarte

[Anonymous Coward]

Doesn't KS already have those?

Never fund a project unless...

[Anonymous Coward]

This is why you never fund a project unless, straight up, it has actual financial planning IN the damn kickstarter.

I mean payments for everything from your takeaway and coffees to licences for Maya or whatever the hell you are using
PRICE EVERYTHING, then people might actually give a damn about your project, and MAYBE your project might actually make it off the ground since you actually planned for the price of it and never just threw out random crappy numbers you thought would work.

More to the point, plan for costs that are just above what you would expect to pay.
So if you ordered food every working day, 5 days, which cost $100 for the week, $5200. Don't even factor in holidays. In fact, count all 7 days, then it at least gives you legroom. So, like, $8000 rounded up. There, there is lunches sorted, now on to your licences.

Basic financial planning is the death of so many Kickstarters, as well as many investments too.
Never underestimate good Project Management. Just do not use Microsoft Project to manage it! Dear god, worst product they have ever produced. It is a golden shit if I've ever seen one, the best example at that.

Refunding my investment

[OzPeter]

I have an investment that failed a few years ago due to probable corrupt practices (for example: an officer in one company was reporting to an officer in another company - but they happened to be the same person, so all sorts of dastardly things happened.).

At the moment the investment is being wound up and all sorts of legal activities are being pursued in order to realize as many assets as possible that actually exist. The people performing the liquidation keep telling me that I will get back between 10 and 50 cents in the dollar of my investment, depending on what legal actions come to fruition and what the value of the reclaimed assets turn out to be, minus of course all the legal costs.

To me this is the only possible way you can get money back from a failure like this, and I can't see how a failed kickstarted project should be any different - if the project fails, then call the owners of the project on it, and take legal means to reclaim as much as possible with the expectation that you will never get 100% back.

Re:Refunding my investment

[u38cg]

Yes, if illegal. If it's simply down to a business failure...

Re:Refunding my investment

[sphealey]

- - - - - if the project fails - - - - -

If the project fails due to fraud, yes. Realistically some percentage of all speculative projects (40%-90%), whether funded through Kickstarter or not, are going to fail. That doesn't mean they or their principals were committing fraud.

sPh

Re:Refunding my investment

[OzPeter]

Yes, if illegal. If it's simply down to a business failure...

from the outside looking in you can't tell the difference between illegalities and mismanagement, but legal action in both cases has a certain ability to compel people to perform actions.

Anyway, its normal business practice to liquidate to a failed company - regardless of how that failure occurred.

Re:Refunding my investment

[OzPeter]

- - - - - if the project fails - - - - -

If the project fails due to fraud, yes. Realistically some percentage of all speculative projects (40%-90%), whether funded through Kickstarter or not, are going to fail. That doesn't mean they or their principals were committing fraud.

sPh

No it doesn't, but there are standard practices in the business world for winding up failed businesses regardless of how that failure occurred.

Re:Refunding my investment

[jmauro]

If your investments results in you having a claim on the assets of the company that failed and based on the seniority of your claim on the assets (i.e. some creditors will be paid in full before other creditors see a dime).

Kickstarter isn't an investment vehicle. They're up front that you have no claim on the assets of a failed company\project and as such if it fails you won't get anything (and conversely if they sell for a couple of billion dollars you will get nothing as well).

Re:Refunding my investment

[Anonymous Coward]

>take legal means to reclaim as much as possible with the expectation that you will never get 100% back

Spending a few thousand dollars on attorney's fees is hardly worthwhile to recover a small fraction of a $100 (or even $1000) contribution.

Re:Refunding my investment

[Saxerman]

Creators are responsible for their projects. When you back a project, you’re trusting the creator to do a good job, so if you don’t know them personally or by reputation, do a little research first. Kickstarter doesn’t evaluate a project’s claims, resolve disputes, or offer refunds — backers decide what’s worth funding and what’s not.

Some projects won’t go as planned. Even with a creator’s best efforts, a project may not work out the way everyone hopes. Kickstarter creators have a remarkable track record, but nothing’s guaranteed. Keep this in mind when you back a project.

An investment is a risk-based transaction. Donating to Kickstarter technically qualifies, but what do you get in exchange for your money? Not an ownership stake, which is what a stock offers. Not a 'financial product', which has largely always been against Kickstarters terms and conditions.

You get a 'Backers Pledge'. And I have yet to see any legal case that would demonstrate that is anything other than charity. Any scammer worth their salt should be able to mount a legal 'reasonable effort' defense that would stand up on court.

Problem is, Kickstarter does not enforce the rules

[Anonymous Coward]

You have to be willing to pay for legal action on your own, which is just not ever worth it for a few hundred dollars of losses. And it is difficult to organize group action.

I've backed several Kickstarters, and while most have worked out, a recent one has been a lesson in the risks. This one is Bonaverde Coffee Changers, and they basically made drastic changes to their automatic coffee roaster about 6 months after funding (removed all ways of controlling the machine, require a limited use RFID chip to activate the machine that you only get from buying green coffee beans from them). They are offering full refunds "when their company is profitable", which may meet Kickstarter's terms of service (this seems still unclear, even after the recent updates), but which effectively require their backers to provide a zero interest, high risk loan to their company.

After this experience, I will be much more reluctant to back a new project, knowing they can do basically anything they want with my money with minimal risk to them.

Comment removed

[account_deleted]

Comment removed based on user account deletion

Back in the days...

[blogan]

Remember when people use to believe in their ideas enough that they'd put their own house on the line? With some Kickstarters, you see people with "I believe this needs to be done, and I'll do it if people pay enough so that I have zero liability and all of the financial gain."

"Well, there's travel involved, and if I get an early flight, I'll need a coffee from the airport Starbucks. That's an additional $8...."

Re:Back in the days...

[Anonymous Coward]

Nowadays no-one has a house to risk.

Re:Back in the days...

[funky_vibes]

Exactly, it's great if you've got a house to risk. By the time people pay off their mortgage nowadays their bones will have turned to dust.

The baby boomers are sitting on most of the money, or act as VCs or angels to rip people off, so of course things'll have to be done differently by younger generations.

Re:Problem is, Kickstarter does not enforce the ru

[itsdapead]

After this experience, I will be much more reluctant to back a new project, knowing they can do basically anything they want with my money with minimal risk to them.

Sorry, but what exactly are people expecting out of crowdfunding?

Crowdfunding works because it is fairly informal and nobody (should) "invest" more than they can afford to lose or enough to be worth suing over. Otherwise, the whole thing would suffocate under the red tape, and the projects might as well go to a bank or VC, put their house up as collateral and risk having the funder foreclose at the slightest hiccup.

If you want to buy a product with warranties and legal rights, go to a shop (even in the USA retailers have some obligation to give you what you paid for). If you want to invest your money without risk, put it in a savings account in a major bank and enjoy the consequent 0.fuckall% interest.

kickstarter kickstarter

[Anonymous Coward]

What we need is a kickstarter to fund the founding of a class action lawfirm dedicated to suing failed kickstarters.

Re:Uhh...

[jmauro]

But then in the next paragraph, they say "here are the terms of the contract between the creator and the backer". I suspect this would be very problematic to enforce. You can't be both arms length, and dictating terms to two parties of a contract without also being a party. It is a logical contradiction.

Every lawyer does this every day when he or she is writing up a contract signed by other parties. The lawyer isn't involved unless one of the parties can prove that the lawyer performed malpractice in writing the contract.

All Kickstarter is offering is a standard contract and terms that both parties can agree to or not agree to. The standardize nature of the contract mean's it's easier to raise money and see who's raising money, so it's more likely everyone uses the standard contract. It's the parties involved choice on whether or not they sign sign the terms.

Kickstarter's top projects

[SternisheFan]

Kickstarter's top projects: When they shipped http://money.cnn.com/interacti...

Top 10 Most Successful Kickstarter Projects http://startupbros.com/top-10-...

Re:Kickstarter's top projects

[sphealey]

The first link was to top projects, which is of interest.

The second link claimed "most successful", but was listed in descending amount of dollars raised starting around $12,000,000 (million). If that's the author's definition of 'successful', great. The indie projects I back typically have budgets in the 5-10k range and about 80% of them produce a finished work. Who is to say which is more successful?

sPh

Back in the days...

[Anonymous Coward]

Well yeah, the economy was also far less shit then too.

Public domain

[phorm]

How about a stipulation that any project that fails must release applicable resources to the public domain, as well as records on the use of applicable funds.

That public domain clause would include source code, artwork, template designs, patents, etc etc. The records, well, that just helps know that funding didn't pay for somebody's vacation and/or drug+alcohol habit.

Re:Problem is, Kickstarter does not enforce the ru

[IgnorantSavage]

I mostly agree with you, but this is not the point. Unfortunately, the flip side of the amounts 'not being worth suing over' reduces the motivation of project originators to actually do what they say they will do. There is a real risk that Kickstarter will be overwhelmed by projects that are deceptive or fraudulent, like the Bonaverde Coffee Changers project.

It seems like Kickstarter will, in the longer run, be hurt by fraudulent projects and that they should have a more proactive approach to avoid being taken over by criminals. Perhaps they are waiting to see if this becomes a wide-spread problem before doing more. The fact that they have made changes to their rules indicates that some issues have been identified.

Of course, in the BV case it appears there may be applicable consumer protection laws, and possibly even criminal laws.

BTW, I was the Anonymous Coward poster above, I did not notice I was not logged in before posting.

I wasn't aware that roads only exist

[publiclurker]

in those three states. I thought they existed everywhere with all sorts of environmental conditions.

KS itself needs to share in the risk

[Anonymous Coward]

KickStarter needs to refund what it takes off the top of a failed project. Perhaps then they will be a little more proactive on helping to prevent project failure.

Yes, but:

[Anonymous Coward]

I backed a project on kickstarter. It was a year late, but the company kept sending out updates (Steve Jackson Games, Ogre 6th Edition, in case anyone is interested).

They offered refunds to anyone who wanted, I don't think there were many takers.

It all depends on what the project is, and who is doing it.

big woop

[trollboy]

Yes yes, kickstarter will now OFFICIALLY slap members on the wrist for defrauding backers. TLDR: Kickstarter still doesn't care, just give them their 10%

Comment removed

[account_deleted]

Comment removed based on user account deletion