Kickstarter, EVs, and Caveat Emptor Stories

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It seems like not a week goes by that I don’t hear about some Electric Vehicle Kickstarter project.  After a while this started eat at me…  my impression, from the early days of Kickstarter, was that it was a funding vehicle for creative projects, and that a lot of these EV projects seemed to be asking for backing money for start-up companies.  It was a question that I put on the shelf…  but kept revisiting.

I’ve put a couple of Kickstarter projects together.  One was unsuccessful, and the second was rejected by Kickstarter.  I could have appealed, but was running out of time so just let it drop.  I’m still not quite sure why they said it didn’t meet the guidelines.  In the meantime, I did set up the Amazon account required…  where I learned the first caveat of Kickstarter:

Kickstarter collects a 5% fee from a project’s funding total if a project is successfully funded. There are no fees if a project is not successfully funded.

For US-based projects, pledges are processed by Amazon Payments, while pledges to non-US projects are processed securely through a third-party payments processor. These payment processing fees work out to roughly 3-5%.

So yeah, ask for about 10% more than you really need.

Looking a little deeper at these EV projects, it seemed like most, if not all of them are in the “Design” category – because it includes Product Design.  Fair enough.  It still irked me that many of them seemed focused on starting a company to accomplish this design project.  Talking about it with some online friends, an interesting distinction was made.  Kickstarter is about funding a project, presumably one that won’t probably be funded in any conventional way.  A project isn’t a company, though there may be a start-up company behind the project.

This was particularly interesting to me, because I have a product I’ve put together, the x-y easel, and a project in mind for it – reproducing a collection of a particular artist’s work for a small museum.  I was considering a Kickstarter pitch for it, but couldn’t decide what would be better – to pitch the product, or the project.  Clearly, the project would, at least for the intent of Kickstarter, be a better fit – especially with the track record for Kickstarter funding of art and photography categories.

So yeah.  Second caveat: keep the focus on a Project.

Now here’s where it got interesting recently.  A friend backed a project.  This was an EV project with several levels of support, but clearly the emphasis was on the $4000 level, which would get you one of their first 100 products.  That’s cool, the product sells on their site for about $5000 now, I believe.  They pitched their company as successful, a real company, and their project was to produce their first 100 EVs.  At best, kind of a stretch for the “project” definition.  The practice of offering what amounts to a pre-order of a product that’s in the prototype stage seems to be more and more common on Kickstarter, in not only the EV realm, but very common in the tech gadgets area as well.  I think the last place I saw it was this awesome little key finder thingy that you can talk to with your smart phone…  provided, of course, you haven’t lost your smart phone too.

So, he does what can only be called buying this $4000 EV.  Then it needs some service.  Then it breaks.  He’s about 600 miles away from the guys that built it, and, understandably, there really aren’t any shops around that have any clue how to work on it.  I spoke to a bike shop that it turns out one of the owners also operates, and got some pretty funny stories about their techs trying to work on these things.  Funny to me, but then, I didn’t pay $4000 for this thing.

Trying to help him out, I start trying to talk to the company about their support, service and warranty, and it becomes pretty clear they’re not really set up to provide that – any of that.  There’s no link on their page, indeed, not even a phone number.  Apparently, we’re on our own, from this company touted as a real company with real facilities and capabilities.

Third caveat: Caveat Emptor, or, let the buyer beware.  Before you support a product by making a pre-order, give some thought to what you’re going to do if it breaks, or worse, doesn’t work out of the box.  Is there any mention of warranty on the Kickstarter project page?  Do they have a site?  Do they have warranty or support information on the site?  A phone number?  If it were me, for a $4000 contribution, I’d contact them via phone and see what they say.

Don’t look for any help from Kickstarter.  They’re very clear that the deal is between you and the project, and take no role in fulfillment or support.

Kickstarter does not guarantee projects or investigate a creator’s ability to complete their project. On Kickstarter, backers (you!) ultimately decide the validity and worthiness of a project by whether they decide to fund it.

Also:

Launching a Kickstarter is a very public act, and creators put their reputations at risk when they do.

Backers should look for creators who share a clear plan for how their project will be completed and who have a history of doing so. Creators are encouraged to share links and as much background information as possible so backers can make informed decisions about the projects they support.

If a creator has no demonstrable experience in doing something like their project or doesn’t share key information, backers should take that into consideration. Does the creator include links to any websites that show work related to the project, or past projects? Does the creator appear in the video? Have they connected via Facebook?

Don’t hesitate to request information from a creator. You can always reach out before pledging via the “Contact me” button on the project page.

So yeah, fair enough, it’s all there in some pretty clear language.

So what about my friend?  He’s pretty stoic about it.  I think there was always something in the back of his mind that this was him supporting something that was unproven, and I think he is taking it for what it is.  The fact that his vehicle wasn’t covered under any sort of warranty was, however, news to him, and he took that news a lot better than I would have.  There is no mention of warranty on either the Kickstarter page nor on their website…  but if I were him I’d be talking to someone about what “Implied Warranty of Merchantability” means in this case.  If it was a $30 product to help me find my keys, yeah, I’d write it off…  $4000?  Well, as of what I’ve seen, I wouldn’t have done it in the first place.

To be fair, I also learned a bit about Kickstarter, my early impressions, and how they’re developing.  According to a friend who’s talked to them, they’re wrestling with the Design category.  It’s clearly something they want to tighten up, to keep the focus on funding creative projects rather than startup companies…  and they want to keep the focus on supporting projects that are “cool and also outside of traditional funding sources — projects that enough people would be into seeing happen but might not be enough to start a company with.”

Finally, there’s the question of just who you’re supporting to do what.  Most of this stuff should be easy to find out, given the Power of the Google, but any good Kickstarter project should give you that kind of information anyway.

How do I know a project creator is who they claim they are?

Perhaps you know the project creator, or you heard about the project from a trusted source.Maybe they have a first-person video. That would be hard to fake. “Is it really U2?!” Well, it is if Bono’s talking about the project.

Still not sure? Look for the creator bio section on the project page. Are they Facebook Connected? Do they provide links for further verification? The web is an invaluable resource for learning more about a person.

At the end of the day, use your internet street smarts.

OK, so let me take a look at two examples.  Here’s this EV company that wants to build 100 products coming to us for support.  As it turns out, it’s three guys from across the country, all of whom own at least one other company each, and want to start this thing up but, presumably, don’t have enough of their own money to fund it traditionally.  Or don’t want to…  there’s no way to tell.  Pretty clearly, though, if they can fund it without taking the risk themselves, why wouldn’t they?  Am I just being cynical and jaded?  I like to think it’s simply being realistic.

Second example, a guy I know fielded a Kickstarter campaign to buy a machine – I think about $30,000 – to expand his business’ capabilities.  Without going into the details for the sake of confidences, in more than a few peoples’ opinions it was a stretch of the intent of Kickstarter at the very best…  but he got his funding.  He set up the thing, it’s in production, presumably working well, though I don’t know for sure.  Now he’s overseas on an extended, and very expensive trip…  with his family.  Is this any of my business? Can I, or even should I, make any conclusions about his finances? No, clearly not, but it leads to my final caveat:

Caveat 4: Don’t assume that the guys fielding a Kickstarter project are starving artists, designers or students with no resources.  The best that you can guess, if you can’t find out for sure, is that they’ve simply elected to try to find resources through Kickstarter, instead of through loans, personal backing, or investors.  Maybe I’m being a bitch, and it’s a case of sour grapes, but again, going back to my impressions of what the site was intended for I’ve never considered that someone with a Kickstarter project could fund it themselves…  but just chose not to.   Maybe I’m just naive.

Let this not be seen as a scathing indictment of Kickstarter, please.

Kickstarter is a remarkable vehicle, and I truly believe it’s being run with the best intentions.  To quote another friend:

I think Kickstarter and the likes is a great idea, really. How many people in the past had bright ideas and the will to start a little business of their own but no cash to get started and the banks would not let them even enter their lobby. Now these people have HOPE and some of them will succeed (and have succeeded already).

We live in a great time, with lots of new possibilities being created for the people and by the people, it’s not only about big corporations or government agencies anymore running the show. Innovation can be everybody’s business.

I completely agree.  And I also completely agree with his next statement:

We live in very interesting times.  And yes for sure some will try to abuse these new systems..

(A big shoutout to the contributors on ElMoto.net for their considered opinions: So, Kickstarter.  WTF?)

 

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