This quote caught my eye today in a NYT piece about Kickstarter
“This year marks the year that we’ve seen Kickstarter enter the real world in a number of ways,” said Perry Chen, one of its founders. “At Tribeca Film Fest, there are a dozen different Kickstarter-backed films, there’s an installation at the Whitney Biennial that was a Kickstarter project and we just had our birthday party at a Kickstarter-funded restaurant.”
In the old days, you could only get access to serious capital by first getting access to money people - bankers, angel investors, VC’s or better yet family (if you were lucky). But as the above article points out, crowdsourcing to raise funds is starting to change that. If, for example, Pebble can raise $7 million in a few weeks via Kickstarter to make wrist watches, well … you get the idea.
Where is this headed? Bypassing formal investment channels is a big deal and no one is quite sure how well this will work out in the long run. Fred Wilson wrote about this the other day. There are new opportunities via Kickstarter and sites like it to give people a chance to get projects going faster and easier, and on the other side to join in for a good cause. But there are risks too. So there is reason for some caution. BTW, if you would like to read a great tale about what can go wrong, check out Andre Gide’s The Vatican Cellars.
But we might take a step back for a moment and ask the broader question — why is this type of crowdsourcing working so well as a web platform? Here is my take. There are two elements to making crowdsouring platforms explode with engagement. The first is to generate “wow”. Something that gets people’s attention. In days of old, this could be achieved by delivering content (like movies). But we can now get a lot more wow from giving people opportunities to do stuff. EBay first started generating this kind of “wow” by giving anyone the possibility to sell anything to anybody. Wow! Etsy is another. Kickstarter is the first (as far as I know) to generate “wow” from creating project investment opportunities. The bottom line - we have learned by now that allowing people to participate in things that enhances their lives generates more “wow” than just asking people to share information to solve problems or even more ho hum, just consume content.
But while this is better than just watching TV, just generating “wow” still has its limits. And here I think we can begin to see some next steps for web platforming. There is still no learning curve so that the crowd can easily track where new value can be found (finding the next wow preferably before your neighbor does). In the world of investing, this sort of tracking tool is something rich folks have had more or less exclusive access to. They got high quality tracking services when they hired money managers. Not for the rest of us! But now we all have tracking tools on the web. Plenty of them. For example, Motley Fool tracks investment opportunities. Similarly, Fast Company writes about all sorts of cooky innovation projects. I could go on and on. But here is the catch. These types of platforms do not give you that exciting opportunity to “jump in” and “try something new” (the wow). To get to the wow, you are on your own. So in a nutshell, here is the problem - we have great new tools like kickstarter that get crowds excited, but we still have a disconnect between taking advantage of wow opportunities and tracking opportunities.
Over time, I think that we will see these two elements merge in web platforms. You will get wow and tracking at the same place. That may be investing in a project. It may be joining a start up group. It may be getting a contract to advise people. But it will often have a money component (because finding and making money are by definition “wow” opportunities). So keep an eye out for platforms that combine opportunities to get “wow” and that track learning to help you connect to the next “wow”.