Most Heavily-Funded Kickstarter Projects Miss Their Ship Dates, Can’t Handle Success

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Crowd funding site Kickstarter has been host to some compelling endeavors, and the site offers a beautifully democratic way for people to back the kinds of products, technologies, and services they care about.

The fundraising portion of these projects can be thrilling, as we saw with the open source gaming console Ouya, but of course once a project has enough cash raised, the originators still have to execute their plans. Thomas Edison would say that the post-idea, post-fundraising phase of a project is about 99% of the work.

There have been some rumblings about what happens to backer money if a developer fails to deliver on a promised project, and Kickstarter has clarified its position on some of those issues. There aren’t hard numbers about how many Kickstarter projects fail, but CNN Money looked at what percentage of them struggle to ship their products on time. After all, delays upset those who’ve ponied up cash to support the devs--especially those who were promised, for example, first dibs on a product in return.

Kickstarter ship dates

CNN Money looked at 50 highly-funded Kickstarter projects, which together collected an impressive $40.3 million from about 420,000 total backers and were scheduled to ship this November. They found that 84% of projects missed their promised ship date. Twenty-six projects were late, while 16 still haven’t pushed a product out the door. The median delay is two months, although one project in particular got pushed back to the middle of next year.

What’s interesting is the reason why the projects fell behind schedule: They couldn’t handle the success. CNN Money found that the developers were typically inexperienced (though ambitious) and expected, say, a few hundred backers for a small project. When instead thousands of people filled the coffers with tens or hundreds of thousands of dollars, the project by nature changed in terms of scale and complexity.

Handling success is one of the keys to success, and perhaps devs hoping to raise some funds on Kickstarter need to be more prepared. On the other hand, if backers saw themselves as investors in a gamble (i.e., willing to lose the money they pledge) as opposed to patrons buying a product, the pressure to succeed won’t be as intense.
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Dorkstar replied on Tue, Dec 18 2012 3:35 PM

I can't say I have ever built a business from the ground up, but in a sense I have.  The company I currently work for came from Israel to the US in July.  And by "the company" I mean one person came to US in July.  As soon as he got here, we met up, did the job interview and 4 weeks later I started here.  We already have a product, we already have the entire infrastructure in Isarel, but just getting the office opened was a nearly impossible task.  We signed the lease on August 15th, we didn't get into our office until Oct 1st, internet wasn't put in until Oct 16th, phones weren't up until about a week after that, and here we are in December, and not one thing has shipped out yet due to the FDA rejecting our first proposal.  Fortunately the FDA approved everything last week, and we're starting to ramp everything up to get where we need to be by January.

  My point being, even my company, which has been around for 10 years, has difficulty starting a new line of product in a different country.  It's not easy, and we're looking at only selling about 10 system a month.  I can't imagine what it would be like if someone walked in here tomorrow and asked us to ship 10,000 devices a week.  It would be incredibly difficult to streamline your manufacturing process, hire quality employees, and get your logistics figured out.  

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CDeeter replied on Tue, Dec 18 2012 5:01 PM

I'd be interested in hearing more about your company, if your allowed that is.

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OSunday replied on Tue, Dec 18 2012 5:33 PM

Same thing here, fill us in Dorkstar!

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Dorkstar replied on Tue, Dec 18 2012 5:34 PM

We have software that's used in conjunction with TAVR procedures.  To save you some googling time, TAVR is a type heart valve replacement procedure.  Our software tracks the aorta as well as the coronary artery, so the physicians can properly place the valve in the correct location.  In the past there wasn't this sort of software so contrast media was injected repeatedly to allow the physician to view the aorta.  The problem with dye is that it eventually has to pass through the kidneys, and when your patient is pushing 90, their kidneys can't handle much.  So not only were patients dying from artificial valves being placed too high or too low, they were dying from the media injections as well.  

  Our software tracks the location of the artificial valve and surrounding objects using an algorithm given to our company by the Israeli military.  I'm not sure exactly how we ended up with it, but the CEO's father was a huge war hero and politician.  He's ranked somewhere around the 65th most important person in Israel's history.  Anyhow, our software requires anywhere from 50%-70% less contrast injections by tracking everything all at once.  Our product that was recently approved is used for heart stint procedures.  It's slightly more sexy, as it displays everything in 3d, and allows the surgeon to use a Samsung series 7 tablet that's attached to the operating table to do all his planning while performing the procedure.  

  The newer product is our main product in the US.  The other one is more popular in Europe, but is gaining ground here.  It's also rebranded and sold by Toshiba.  Siemens, GE, and Philips all have their own versions, but none of those are able to track the device and the aorta at the same time.  So for as long as we have that, we have the edge.

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OSunday replied on Tue, Dec 18 2012 5:40 PM

Is this taking off quickly and successfully in the U.S.?
It seems like something so beneficial would have a higher demand than 10 units a month 

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Dorkstar replied on Tue, Dec 18 2012 7:14 PM

OSunday:

Is this taking off quickly and successfully in the U.S.?
It seems like something so beneficial would have a higher demand than 10 units a month 

You have to think about this a little deeper.  The medical field is completely different from the typical consumer market.  Our type of products range from $50,000 to $250,000 a piece, and our customer base is MUCH smaller.  Not only are we medical, but were in a specialty field.  Not every hospital is equipped with the type of equipment to perform valve replacement, and even if they have it, they still need a physician who has been trained.  Seeing that the TAVR/TAVI procedure is only about 7 years old, there aren't a whole lot of people trained or willing to take the dive into the new procedure yet.

Take for instance, Dallas.  I can think of probably 10-15 hospitals within 20 miles of me.  Out of those 10-15 only 4 may have capabilities for this type of procedure.

So even though were only selling 10 a month (of just this one product), we're making $500,000 from the software, extra for all the other items that they are unable to provide (labor, cables, KVM's, etc.), then after the sale we'll have service calls to either train personnel, or repair a faulty system.  I'm not sure about this company, as I haven't had a chance to do install yet with them, but at my previous company we generally charged between $250-$500 an hour for service calls, plus our markup on parts.   So $500,000 can easily turn into $700,000 after a period of time, then there is always upgrades :P

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Castle Story's proto-type went out and an update for the proto-type went out too. They have been good at putting out regular Dev diaries too. I think things are moving along.

http://www.kickstarter.com/projects/902505202/castle-story Kickstarter Page

http://www.sauropodstudio.com/ Devs web page

https://www.facebook.com/SauropodStudio Devs' Facebook page

http://castlestoryonline.com/ Game's Forums

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CDeeter replied on Wed, Dec 19 2012 8:35 AM

Sounds like a really cool niche to be in. So although it maybe slow building, it sounds like it will remain nicely profitable for the foreseeable future. The humanitarian angle on this is great too. I'm always amazed at the advances in medical tech nowadays.

Thanks for sharing, and hope to hear more as your company progresses.

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timaeus replied on Wed, Dec 19 2012 9:26 AM

I was surprised to see several projects I had backed being listed under the "Where the $#%! is it!?" heading. Maybe I'm atypical, but I haven't paid attention to the delivery date of any project I've backed, so I never realized they're "late." Part of it is I know a big part of those dates are wishful thinking. But also, those dates mean different things to different developers. If a pledge tier has multiple rewards, some developers will put the delivery date as when someone can expect the *first* reward. Others put the delivery date as when they can expect the *last* reward. But again, it's all wishful thinking.

*shrug* As long as the communication is maintained, I don't see that it's a big deal.

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sackyhack replied on Wed, Dec 19 2012 9:29 AM

Has anybody supported any Kickstarters here? I've thrown my cash at a few by well-established developers, like the one from DoubleFine, Wasteland 2, and Star Citizen. I would've supported Project Eternity if I hadn't missed it. It's kind of a tough situation. On the one hand, new amateur developers have some of the more exciting ideas. On the other, when it comes to spending my money, I feel like developers with good track records have the actual chops to complete the project.

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Dorkstar replied on Wed, Dec 19 2012 9:30 AM

CDeeter:

Sounds like a really cool niche to be in. So although it maybe slow building, it sounds like it will remain nicely profitable for the foreseeable future. The humanitarian angle on this is great too. I'm always amazed at the advances in medical tech nowadays.

Thanks for sharing, and hope to hear more as your company progresses.

Yeah man, it's a huge advancement in our capabilities to help others live longer.  I'm curious to see where the tracking algorithm goes from here, there are so many uses for places where x-ray can't see.

 Plus I get to work with some high end workstations, and it's incredible to see some of the engineering that goes into these cases.  I'll take some shots later of the inside of the Dell T5500 and the HP Z820 workstations to show you guys what I'm talking about.  It's incredible to see the things these companies come up with.  I'm highly surprised no consumer case manufacturer has come up with some of these designs.

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