The Perils and Possibilities of of Crowdfunding

By: Chuck Frey

Just because you can create a crowdfunding campaign for your next Big Idea doesn’t mean you should, as book author Glenn Fleishman recently discovered.

Ironically enough, Fleishman was trying to raise money to write a book about Kickstarter-style crowdfunding on KickStarter.com. His goal was to raise $35,000, but he was forced to pull his campaign after it only gathered $4,000 worth of commitments in 17 days. Chastened by the whole experience, the author plans to go back to the drawing board to figure out what will appeal to potential investors, reports a recent blog post on the Network World website.

In order for a crowdfunding campaign to be successful, several things have to happen:

First and foremost, you must have a compelling product idea that captures people’s imagination and will actually provide a useful service. There is no substitute for this. I can’t remember the last time I heard about a business book that would be published soon that ignited my imagination. It’s just not as sexy as other types of products and services.

The request for funding needs to make sense in the context of the product you’re trying to create. For example, if you were trying to raise money for an innovative new acccessory for Apple’s iPad, $35,000 is probably quite reasonable, considering the investment you will need to make in contracting for design, tooling, materials and production. Asking for $35,000 to write a book – which has a relatively low production cost, aside from the author’s time spent researching and writing – is probably unreasonable in the minds of most people.

Perhaps $35,000 is actually not unreasonable, considering that Fleishman indicates he would be traveling to do some of the interviews for the book (which would also be recorded in video for premium sponsors). But the burden of proof is on the person writing the proposal to help the audience of potential donors to understand what, exactly, they are being asked to fund. Fleishman, who is an accomplished technology writer, mentions that he will be traveling to conduct interviews for his book, but doesn’t explicitly state in his Kickstarter proposal, “This is how the money would be used.” I think that’s a mistake.

And now, a crowdfunding success story: TouchFire

One Kickstarter crowdfunding campaign that I recently participated in that was very well thought out and delivered a cool product was something called TouchFire, a transparent screen-top keyboard for Apple’s iPad. Its developers sought $10,000 in funding, and ended up with over $200,000. TouchFire is a soft plastic overlay that sits on top of the Apple iPad screen and enables touch typing on the tablet’s flat surface. Its tactile surface matches up exactly with the keys of the iPad’s virtual keyboard. When not in use, it can be folded back and stowed within the standard iPad cover. It’s an incredibly simple but awesome idea! Designing the TouchFire proved to be challenging. It had to be thin, light and flexible enough to live in the iPad’s cover. On the other hand, TouchFire’s keys had to provide the proper force resistance to allow people to rest their fingers and type naturally.

I made a modest donation to the TouchFire campaign and was able to purchase one at a discounted price. I now have a very cool accessory for my iPad. I can look at it and say, “I helped to fund the development of this!” It’s a good feeling to have even played a tiny part in helping someone with a worthy idea to bring it into the world.

Lessons learned

Why was TouchFire’s Kickstarter campaign a success? It starts with a compelling product that solves a real need for a sufficiently large audience – the millions of iPad users worldwide, who have viewed the experience of touch typing on a completely flat surface as something of a compromise. External keyboards are available for the popular mobile device, but they add too much weight and bulk for most people. TouchFire is very light weight, and can be used, stored and carried with you, wherever you take your iPad.

The other factor is the “crowds.” Crowdfunding sites like Kickstarter don’t have hordes of people waiting for your proposal, wallet in hand and ready to fund anything that looks promising. Rather, as with any online venture, you must provide the audience. The developers of TouchFire were able to tap into and stoke a well-developed ecosystem of iPad websites, blogs, discussion groups and other media, and get them excited about this innovative concept.

As for Fleishman’s crowdfunding book, the Network World article says he is a veteran tecnology writer, who has written articles for The Economist, BoingBoing, MacWorld and many other publications. But that doesn’t necessarily translate into a large, passionate online audience who is waiting to fund a project like this.

I think Fleishman’s book is a cautionary tale about the limits of crowdfunding. It works well for certain types of products and markets. Others, not so much. If anything, it helps us to more clearly define the boundaries of what’s possible and practical in this Brave New World.

By Chuck Frey