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Does Online Crowdfunding Actually Reward Innovation? (strategy-business.com)
Slashdot reader Anirban Mukherjee is an assistant marketing professor at Singapore Management University who led a team analyzing every Kickstarter project ever launched in nine product-oriented categories. An anonymous reader summarizes their results:
One 2013 report predicted $96 billion a year in crowdfunding by 2038 -- nearly twice as much as what's currently funded by venture capitalists. (In a foreword, AOL co-founder Steve Case touts the potential of crowdfunding for "the rise of the rest.") "Many have predicted that online crowdfunding will democratize product development," writes business journalist Matt Palmquist, "allowing small entrepreneurs who lack the contacts, resources, and experience of larger companies to overcome economic, geographic, and social barriers on their way to market." But a large-scale analysis discovered that the biggest barrier may be consumers themselves. "The study's authors found that the amount of money pledged increased when the product description emphasized either originality or utility -- but dropped when both attributes were mentioned. The findings suggest that the crowd does not yet prize true innovation."
"The authors posit that the high degree of ambiguity surrounding crowdfunding might scare consumers away from supporting groundbreaking projects. In the typical shopping context, they point out, consumer regulations protect the buyer. But in crowdfunding, consumers may never receive the product... Another study found that more than 75 percent of successfully funded Kickstarter projects are significantly delayed... 'We speculate that the higher level of uncertainty in the crowdfunding context drives backers to choose modest innovations and shy away from more extreme innovations, i.e., innovations that are high on both novelty and usefulness,' the authors write."
After reviewing 50,310 projects, the team concluded that crowdfunding "may not be the panacea for innovation."
"The authors posit that the high degree of ambiguity surrounding crowdfunding might scare consumers away from supporting groundbreaking projects. In the typical shopping context, they point out, consumer regulations protect the buyer. But in crowdfunding, consumers may never receive the product... Another study found that more than 75 percent of successfully funded Kickstarter projects are significantly delayed... 'We speculate that the higher level of uncertainty in the crowdfunding context drives backers to choose modest innovations and shy away from more extreme innovations, i.e., innovations that are high on both novelty and usefulness,' the authors write."
After reviewing 50,310 projects, the team concluded that crowdfunding "may not be the panacea for innovation."
Who cares if crowdfunding projects meet some academic definition of "innovation"?
That question asked, I suspect the "problem" has to do with the tech adoption cycle: early adopters and pragmatists are two different groups that are important at different phases of a product's life. Anyone who has ever sold a tech product into a market that's never seen tech before (granted a less common experience than it was twenty years ago) knows you can't appeal to both groups at the same time.
In the end success means winning the pragmatists over, but early adopters are a key step toward that goal.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
It seems obviously to me that successful Kickstarter projects provide people with something they already know they want. Even if the project can't deliver people have already internalized their desire for it. Truly novel and innovative ideas are typically things people don't yet know they want, like it's famously said that if Ford had asked people what they'd want they'd say faster horses. I didn't understand I wanted a smartphone until I actually had one, if you'd ask me up front what I wanted from a next-gen phone I'd probably say battery life, call quality and whatever else you'd want from a dumb phone.
Live today, because you never know what tomorrow brings
One 2013 report predicted $96 billion a year in crowdfunding by 2038
Trying to predict technology and economics 25 years out is sillier than trying to forecast the weather that far.
What would 1976 predictions of 2001 computer investment have looked like?
Of course it does.
Utility is something that happens AFTER the product is created.
A truly original product has unknown utility. We didn't know what you are going to use the internet for before we invented it.
When someone claims both utility and originality before the product is created and sold it is a key symptom of a scam artist. They are claiming that they personally created a unique, wonderful project with tons of use - and that everyone else was a moron for not thinking of it's obvious uses before them.
You can discover massive utility for a slight innovation, or you can discover a huge innovation with unknown utility. But when people talk about both, they are most likely a scam artist.
excitingthingstodo.blogspot.com
Nobody ever claimed that it was. In fact, I don't think anybody in has honestly shown that X is the panacea of Y. It's a new, different, and complementary way of funding a project. There are others such as public fundings and VC. Nobody said kickstarter was going to replace those. News at 11.
Crowdfunding allows the creation of goods that the have a smaller number of people interested in them and that would not exist otherwise. Nothing says that these goods need to be "innovative". If I and 10'000 others keep the creator of a web-comic financed because I like his comic, that is not innovation. That is merely funding a specific form of entertainment that appeals to a smaller number of people and that the commercial publishers with their focus on the mass-market would never have funded in any way.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
because i dont want to spend hundreds of dollars for a product that does not exist, build it, test it, when it is a verified product that actually does what it is supposed to do then i will buy it, LimeSDR is one that caught my interest, they claim to have a product, but i never seen it for sale at amazon, HRO, gigaparts, or dxengineering or anywhere else reputable and trustworthy for selling high tech electronics
Politics is Treachery, Religion is Brainwashing
Tell me what's going to happen tomorrow. No? Ok then.
Requiem for the American Dream
Not as bad as child molesters
The methodology went like this: take all projects with goals between $1,000 and $100,000, and check how many times their descriptions say 'novel' (or a synonym of it) and 'useful' (or a synonym of it) compared to the size of the description (i.e., percentage of these words), and compare to money made. This doesn't really reflect usefulness or innovation. Just from normal ads, I tend to associate exaggerated claims of innovation and quality with shoddy products, and I imagine that Kickstarter projects which harp on how innovative and useful the product is do so in an attempt to convince backers that's the case, not necessarily because it really is. So the real conclusion of the research might be not that people don't want innovative, useful products, but that the advertising strategy of emphasising these aspects doesn't work. (It's hard to know what the case is without a more detailed research, but I'm certainly not going to do that research.)
The actual research doesn't claim that more/less innovative projects are more/less funded. The use of 2SLS/instrumental variables explicitly rules out unobserved variables (including how innovative the project really is). Hence, the research only makes claims regarding the extent of novelty and usefulness claims and does not speculate on the underlying nature of the project. The evidence does not support exaggeration. Making novel and useful claims is linked (causally) to much more money being pledged to the project. In fact the effect size is staggering. With exaggeration, the community should discount the project description. But it doesn't. What is surprising is that if people fund more if you say its novel, and they fund more if you say its useful, why do they fund less if you say its both novel and useful? Why do they respond positively to novel, and positively to useful, and negatively to the joint of these. This effect is stable across categories, across time. It does not seem to be a learning story (backers learn that novel + useful is more risky and hence better not funded). It seems to be something more fundamental about how we as consumers/individuals respond to innovation claims. But the evidence cannot rule out all confounds: the work is more exploratory than confirmatory. Re: measuring innovation. Arguably this is a more important question. But the extent of innovation depends on a potential backer's knowledge and their own needs. What is new to someone, is not new to another. What is useful to someone, is not new useful to another. This is an active area of research so other methods may help address this issue. But it would be cost prohibitive to do this at scale using archival data.
Back in 2007, the Slashdot consensus was that the iPhone was lame, had pointless features, and was doomed to failure since nobody wanted to use an iPod as a phone.
On the other hand, another slice of the geek population has had been having PDAs such as Psion and Palm for a around a decade.
They already had pocket computers, with very rich ecosystems of application.
And some already used to connect their PDAs to networks thank to nascent Wifi or by pairing (Bluetooth or even IrDA) with GPRS-capable dumb phones.
(That was my case : Palm IIIc, then Tungsten T3. Pairing with IrDA, then Bluetooth to an Ericsson T39, then a Wifi SDIO card)
To that crowd, an iPhone was pretty lame and useless.
- the only new feature was the multi-touch capacitive screen (most PDA used resistive single touch).
- it lacked everything else that made PDA great.
It wasn't such a huge innovation that we weren't able to grasp it.
It was a huge step backward.
I didn't want a smartphone, because I already had way much better when the original iPhone launched.
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
Self fulfilling prophecy, mostly.
But if you dig into *why* these prophecies tended to self-fulfil, things would be clearer.
Star Trek is a fiction show by writters. Their only limitation is their imagination, and they tended to imagine what would be cool to have no matter how realistic (pocket computer) or not (warp drive).
The show writter "simply" put form to some of the more technical human desires.
Then some of the gadget ended up appearing in real life, because :
- lots of engineers agreed or were already thinking that, indeed, it would be could.
- in those fields the technology would eventually catch up.
On the other hand, I you would have ask *market* specialist, investors, etc. during the same time instead of asking Sci-Fi writers you would have gotten something along the lines of :
"More big iron ! Invest in IBM now ! " and "Teletype to connect to the big iron in each middle-upper class home ! Invest in Bell !"
"Sufficiently advanced satire is indistinguishable from reality." - [Tips: 1DrYakQDKCQ6y52z6QbnkxHXAocMZJE61o ]
It rewards innovation in attention whoring and advertising, but I repeat myself.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
It's all about money, not progress, at least in America. Therefore, the question is absurd.
We'll make great pets
"But a large-scale analysis discovered that the biggest barrier may be consumers themselves."
Indeed, those fuckers will just buy what they like or want, it's a shame.
The market in general is very risk averse. Innovation requires risk..a step into the unknown. Almost every new invention or innovation requires at least a small group of 'early adopters' who will take a chance on the new thing enough to get some market traction. If the product is truly good, then lots of people will jump on board once they know most of the risks have been eliminated. But until then, it sees little support. This is a primary reason many startups fail. They are caught in a 'catch-22'. Cannot get the resources needed to build and perfect the product without market adoption first. Cannot get any market adoption since the resources to actually build it are not there.
That is IMHO not the strong side of crowdfunding. Crowdfunding is best when the solution is well known, desired by some potential users, but not being produced by the market because the product is financially not interesting enough (could be "too small userbase" or too risky).