When James Proud began his Kickstarter campaign for a sleep tracker called Sense, he didn't have just money in mind.
His company, a San Francisco-based startup called Hello, had already raised $10.5 million in financing from investors — and, make no mistake, the $2.4 million from Kickstarter helped. But beyond just the pre-orders that were placed during the campaign, Proud and his team were actively sifting through comments and messages to incorporate feedback for the device.
"Trying to convince people to come onto your site and stay engaged with you over months is pretty hard to do," Proud said. "Kickstarter, the most valuable thing they have are these millions of people, who want to be engaged with these products. So now we have 20,000 people who are interested in tracking our progress, for us that community aspect was the most important thing. We listened, and said, 'that makes sense, and we can find a way to do that' — so our engineers found a way to do that."
Hello's experience showed a side to Kickstarter that goes beyond raising funds or securing early orders. The site can help build a passionate community around a product that helps shape its development -- a feature that money can't buy, and which makes the service useful even for startups that have already secured millions of dollars of venture capital funding.
Alex Klein and his team behind Kano, a lightweight computer kit built around the $35 low-budget Raspberry Pi computing system, had a similar experience. It changed the design of the housing for the Raspberry Pi unit — which is otherwise just an exposed computer board with a few ports attached to it. The team also incorporated a Bluetooth radio in the keyboard after requests from the community, as the original build had just a USB radio.
Klein, too, has raised outside financing, and the Kickstarter project that would go on to raise $1.5 million. Now, after shipping 18,000 computers, Kano is widely for sale for $150. Many project organizers are finding the community, home to plenty of technically-savvy early adopters, is often a well of ideas.
"Projects aren't set in stone when they're being funded on Kickstarter — they're often at the earliest stages of development and the creative process can take twists and turns," Justin Kazmark, a spokesperson for the company, said. "We do our best to foster a community that values creative independence and creators of all stripes can bring their ideas to life on their own terms. Projects are at their best when creators are transparent and update backers along the way."
Sometimes the changes are small. In the case of Sense, the sleep-tracking device that sits beside a bed, the Kickstarter community requested a replaceable battery in a sensor that sits inside a pillow.
Building and shipping devices comes with its own challenges beyond building software — and can be capital intensive — but Proud said the goal of the campaign was not just financing. Even after the campaign ended, Hello still receives hundreds of messages about its product through Kickstarter — and it responds to every one, he said.
For Ouya, a small $99 Android gaming console, the community correctly pointed out that the controller's buttons would be difficult to distinguish for players with red-green color blindness. To get around that, the company added letters to each button to identify it beyond a color, early employee Tiffany Spencer told BuzzFeed News. Ouya raised $8.6 million during its Kickstarter funding round.
"The active feedback and engagement of the community prior to hitting production was one of the aspects of Kickstarter that we found most valuable," she said.
Still, the funding is important even if a company has already raised financing from investors. A Raspberry Pi unit, for example, costs $35 — and creating a complex supply chain for hardware products like Ouya and Kano can be capital-intensive. Through the Kickstarter campaign, Kano essentially secured more than 12,000 pre-orders for its lightweight computer.
And increasingly often, companies that run successful campaigns go on to raise money from venture capital sources. The company behind Pebble, a smart watch that was one of Kickstarter's most successful projects, raised $15 million in a financing round from venture capital firms like Charles River Ventures. Ouya, too, raised $15 million in venture capital from firms like Kleiner Perkins Caufield & Byers.
Kickstarter itself can play a role in the process. Proud said he visited the company's offices in Brooklyn to get feedback for the device and campaign before going live. But simply collecting feedback from the community and incorporating it does not guarantee success. Ouya, for example, was recently in discussions for a strategic investment or an outright sale, several people familiar with the talks told BuzzFeed News.
The makers of Ouya raised roughly $8.5 million in a Kickstarter campaign before launching. But Ouya is no longer alone in the world trying to build a cheap console that can run games on large-resolution televisions. An alternative to the Xbox One and PlayStation 4, Ouya was billed as a low-cost console that would run Android games on a television. Following its Kickstarter campaign, Ouya raised $15 million in a round led by Kleiner Perkins Caufield & Byers. The company, however, was not able to secure a "killer app" and as such hasn't hit mainstream success like the Xbox One and PlayStation 4.
And for projects that are incorporating community feedback, there are also massively successful hardware projects that don't end up changing. Pebble, developed by a Palo Alto-based startup that raised $10.3 million in its Kickstarter campaign, did not incorporate any new ideas into its hardware. "We had everything (including waterproofing) locked down before launching on [Kickstarter]," founder Eric Migicovsky told BuzzFeed News in an email in July.
The success of Kano — and many other projects — still remains to be seen. And there is plenty of skepticism around crowd-funding campaigns, which can sometimes seemingly fail to end up delivering a product after raising a large amount of money and spending it all.
Matthew Lynley is a business reporter for BuzzFeed News in San Francisco. Lynley reports on Silicon Valley and the tech industry.
Contact Matthew Lynley at firstname.lastname@example.org.
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