Between Kickstarter’s frauds and phenoms live long-delayed projects

In my view, consumer printers are hulking and inscrutable plastic machines, worse to look at than to use. When industrial design students need to be punished, they have to sit alone in a room with one.

So a year ago, I got excited about a new Kickstarter project that promised to change the printing design paradigm. Zuta Labs' printer looked like a tiny marvel: a little machine the size of a large apple that walked across pieces of paper, leaving ink footprints. Twee as a doily collar in a Wes Anderson movie, this device seemed a perfect critique of existing printing technology. I wanted a whole family of them. I wanted to replace my family with them. We'd go to the park, eat ice cream, chase each other though the grass, and during a quiet moment, sitting on a blanket, the printers would inch across my hands and knees, writing, "I'm so happy." Me too, printers. Me too.

Zuta Labs' Kickstarter goal was high ($400,000) and its estimated ship deadline was far off—January 2015. "Buying" a printer through the project was expensive, the reward for a minimum $180 contribution. I had to say no. Ultimately $180 was too much money for that adorable little printer, even if it was the only kind of printer that will ever fit in a tiny New York City apartment. And as I talked myself down, I reasoned that if it succeeds, I can buy it later. Maybe. Hopefully.

Recently, I remembered the project and had to check up on it, as you do with erstwhile crushes. The Zuta Labs printer was successfully funded, having raised $511,662. It's gotten a makeover since I last saw it (the crush metaphor holds) and now has a closed design with its mechanics encapsulated in plastic. After reaching its funding goal, the device went on to receive heaps of coverage in various tech press outlets. It even won a Consumer Electronics Show award for innovation.

It also hasn't shipped. That's not to say it disappeared. Zuta Labs still plans to ship its printer, but the wait time I thought was lengthy a year ago has  more than doubled.

By this point, fairy-tales about successful funding and horror stories of projects that end in abject failure or corruption have led most of us to recognize the volatility of any Kickstarter project. But lost between these two extremes is a long, sometimes confusing road that is invisible, and sometimes even inaccessible, to the mildly interested passersby. In today's Kickstarter Web storefronts, projects appear so singular to their backers that any unplanned activity can seem more erratic and suspicious than it actually is. In most cases, though, delays are normal.

This underreported grey area between funded and shipped (or sailed) isn’t necessarily something to loathe. Rather, it highlights many of the reasons crowdfunding is worth protecting—even if some of the practice’s worst contradictory forces are at play.

Who can resist this?

The after of "happily ever after"

Severin Marcombe is one of the creators of Lima, a file-sharing dongle that acts as the "brain" connecting one person's various devices: USB keys, tablet, laptop, desktop. If the Lima software can be installed, Lima can assist devices in sharing files between them without having to put anything in a cloud service. The project asked for only $69,000 in funding, but it cleared $1.2 million before its campaign closed. Over 12,000 people backed the project. Lima estimated that its first round of rewards, one of the "plugs" that enable file access between devices, would ship to backers in December 2013. As of this month, the company has yet to ship its final project. It did just complete a beta testing round with 500 users, however.

"We were a really small team," said Marcombe. The product idea, he said, is actually nearing four years old, and its founders turned to Kickstarter after they were unable to impress investment sources at the product's earliest stages. "The first thing they say is, OK, you need money to make 1,000 [units], and I will invest."

Later, Marcombe wrote that he was expecting only 1,000 backers (Kickstarter provides tools to limit the number of people who can buy a reward, such as the physical product). But once funding was done, Lima ran up against several manufacturing problems. "What we had was a lot of providers being late… you can't anticipate it," he said.

After funding, Marcombe wrote in November 2013 that the team had made a decision. Lima would aim to ship a polished, thoroughly-tested product rather than a "first iteration." He presented a redesigned Lima and noted the new, higher standards for functionality. This would take "several months."

Marcombe told Ars that he had heard from other startups that his hands were tied by the number of backers he'd be affecting with his product; he'd regret it if he rushed either the software or hardware. But the hardware proved difficult to pin down, with several trips to China logged in the project's updates. At one point, Marcombe's partner wrote a long post about troubleshooting a shipment of devices that were having kernel panics in order to figure out the RAM provided by one of the two factories used was subpar.

Changing the product name has been only one of Lima's unforeseen hurdles.

Like Lima, many product-oriented Kickstarter projects, even the multimillion dollar ones, tend to stumble because they hit a logistics dead zone. They’re too big to hand-make but too small to get clout with overseas manufacturers, who are used to dealing with and prioritizing much larger companies with much larger orders. Perhaps rightfully, project creators tend to feel like they are at the absolute bottom of the priority list.

These manufacturing problems are then compounded by two things: a lack of focus in the product design and a need to shift priorities in the lives of the creators. As of 2012, Kickstarter no longer allows creators to show only renderings of a product; any functionality described must be performed and demonstrated with a working prototype. However, creators often continue to add to a product's functionality after funding is finished, and there continues to be a vast gulf between a prototyping a product and manufacturing one.

While some project creators are aiming to start a business, many others are shepherding side projects that become runaway successes. Finding Kickstarter success forces a creator into several more full-time jobs practically through osmosis, from operations manager to customer service to marketing to HR. As a result, creators often back themselves into more of a full-time role than originally intended.

Justin Knowles, the creator of the Kickstarter project for Kolstom carbon-fiber sunglasses, said that though his Kickstarter raised only $80,346 on a $15,000 goal in 2012, managing it still overtook his life. He'd created a prototype of the sunglasses shown in the campaign and had experience making carbon fiber products before, since "product development is my full-time day job." After completing funding, he delved into developing IP for his product, the start of a purgatorial two-and-a-half years of development during which he spent more money than he raised.

Throughout, Knowles posted photos, visible only to backers, of the production process. He considered switching the glasses to a plastic "subframe" that would be wrapped in carbon fiber and easier to manufacturer. But when his backers pushed for the full carbon fiber product, he switched back. In May of last year, Knowles wrote:

"This update isn't an easy one. Since the last update [in April], I have yet to hear back from my manufacturing partner. They've been non-communicative at this point and while I'm very frustrated I am holding judgement until I am able to go down there in person. The team there has been generous with their time and resources and while Kolstom has been a back burner project for them I really think they are the best option I have."

Six months later Knowles ultimately declared failure, drowning in spreadsheets of his spending.

"I thought sunglasses would be easier," Knowles told Ars.

Stories like Lima's and Kolstom's happen more often than we realize. Take ZPM Espresso's attempt to create and ship a limited-run, PID-controlled espresso machine, which began with a runaway funding campaign—$369,569 pledged on a $20,000 goal. This initiative also ended with a declared failure despite one its creators, Janet Tambasco, telling the New York Times Magazine that "the coffee machine works, and has always worked." But the story, the team's lack of experience in manufacturing, inability to hold sway with overseas manufacturers, and ill-advised hiring of consultants who could not add to the project led to a premature ending in January 2015.

What is worth saving

Ethan Mollick, a professor in management at University of Pennsylvania's Wharton School, does some of the most quoted research on the business of crowdfunding. In a 2013 study, he found that 316 of the 471 successfully funded projects analyzed—all with estimated delivery dates of July 2012 or earlier—promised to deliver a physical product. Only three of those 471 projects had declared failure and offered refunds, while another 11 dropped off the map and stopped responding to their backers. Actual shameless fraud appeared rare.

"The concerns about the ability of projects to deliver, however, are supported," Mollick wrote. Only 24.9 percent of the projects analyzed delivered on time, and 33 percent "had yet to deliver" at the time of analysis. The average delay measured 2.4 months. Projects that raise ten times their goal are half as likely to deliver on time.

Mollick also found a correlation between how much money a project raised and delays: projects that raised under $50,000 had a near-perfect delivery rate after eight months' delay, while projects that raised more than $50,000 hovered around a 75 percent delivery rate eight months later. According to the New York Times Magazine, Mollick reported that since his 2012 evaluation, another 14 percent of projects had delivered either nothing or a subpar product.

Mollick takes the opposite stance. "I'm impressed so many things get delivered at all," he told Ars.

While Kickstarter projects' delivery rate seems unreliable, it's significantly better than businesses that operate from venture funding. When investors take on new products or businesses, they are operating on the idea that maybe one in ten will be a big hit, a couple will be modest successes, and the rest will fail, Mollick tells Ars. In that light, the delivery rate of Kickstarter projects is significantly higher if any portion of the delayed projects end up delivering.

But unlike venture capitalists, backers on Kickstarter are not accustomed even to risk. They don’t (nor should they) see themselves as investors, betting on a spread of projects to soften their losses. For most backers, all that matters is whether the one project they believed in succeeds. This often leads to intense dissatisfaction. Disgruntled backers scrutinize any creator movements on social media that doesn’t have to do with advancing their promised product, and at worst come doxx or threaten project creators.

Not only is the rate of success for crowdfunding likely higher, but it may give realization opportunities to a much more diverse audience than traditional investment models. Statistics show again and again that most VC money goes overwhelmingly to men. Crowdfunding, by contrast, benefits female creators.

Women own 30 percent of the businesses in the United States, but only 13 percent of companies that receive VC funding include one female founder, according to Pitchbook. (As recently as 2010, that rate was just six percent.) According to joint research between Mollick and Jason Greenberg of New York University, women are still a minority of crowdfunding project creators, but they are 13 percent more likely than men to meet their goals on Kickstarter regardless of the amount sought or the quality of their pitches. Mollick and Greenberg found that this was due in part to "choice homophily." Given the audience of gender-balanced backers, women are more likely to support other women on Kickstarter. This is in contrast to VC partners, which are overwhelmingly male (only six percent are women) and give money to mostly men. A 2014 report showed the split on Kickstarter was 55/45 in favor of men. On crowdfunding site Indiegogo, 47 percent of the campaigns are run by women, Indiegogo co-founder Danae Ringelmann told CNBC.

The more abstract benefits of Kickstarter aside, it seems worth noting that the system can and does work, and not just in the sense of delivering products. Emily Brooke, the creator of the Blaze bike light, raised more than twice her goal (£55,000 on £25,000) and said that while the hardware manufacturing process was "flipping hard," the experience was worth it and interacting with her backers was a great experience.

Campaigns can get "a shit ton of grief and abuse," said Brooke, "but our backers have always been brilliant." Creators often credit their backers with doing more than putting up money; they influence the design and provide encouragement when creators update them on how the project is going. When faced with the choice that always seems to come up in the funding aftermath—ship a mediocre product on time or a good product late—Brooke merely polled her backers. Of 471 backers who responded, 465 preferred her to ship later. So although she missed her estimated delivery of April 2013, she posted a January 2014 with the subject line "THEY'RE ON THEIR WAY!!!" Brooke plans on mounting a new campaign this year.

Of course, the occasional fraud does happen. Just this month, the Federal Trade Commission issued a settlement order to Erik Chevalier, the creator of a project to produce a board game called The Doom That Came to Atlantic City. Chevalier raised over $122,000 in 2012 from 1,264 backers, but he canceled the project after 14 months. he FTC alleged that Chevalier “spent most of the money on unrelated personal expenses such as rent, moving himself to Oregon, personal equipment, and licenses for a different project.” The game’s designers later partnered with Cryptozoic Games, which started shipping the game in 2014. In September 2014, Kickstarter added language to its terms of service telling creators that if they fail to “[fulfill] the promises made in their project,” they may be subject to legal action.

Brooke's manufacturing process, documenting by the manufacturer.

Adjusted expectations

Declared failure happens with crowdfunding, even if it's not the majority of projects. But delivery with significant delays appears to be the most common outcome despite not being crowdfunding's most visible narrative.

It’s easy to forget that Kickstarter originated mainly as a place to get big projects off the ground, particularly in the arts (things like films, large-scale installations, writing projects, records). Many of the original staff’s background was in the arts, including that of the founders. Founder Perry Chen’s Wikipedia page identifies him as an artist, and he tried to make a career in electronic music; founder Yancey Strickler was editor-in-chief of the site eMusic; founder Charles Adler originally took on the role of Kickstarter’s designer, and before that he founded an online arts magazine and design studio. Jump-starting salable products was, at first, only a small component of Kickstarter’s overall mission.

But over the the last six years, the discussion around the company has become about products its creators have launched or failed to deliver. While five of Time’s 25 best inventions for 2014 were Kickstarter projects., the platform continues to be the launching pad for art and film projects. There was the documentary Finding Vivian Maier, a resurrected Aphex Twin album, publications including Narratively and Matter, and the development of a “spiky-armed tumbleweed” mine detonator that is now sits in New York’s MoMA as part of the permanent collection.

Kickstarter has adapted over time to its users’ penchant for product-based rewards. The requirements for demonstrating a workable product changed in 2012, when Kickstarter said creators had to have a working prototype that could perform all the features described in the campaign. In 2015, Kickstarter opened a new resource-sharing part of its site called Campus, where creators can relay information to each other about trustworthy or responsive manufacturers or other partners needed in the post-funding execution process. A service industry has even cropped up around the need for streamlining production on the backend of crowdfunded projects. Highway1, a "hardware startup accelerator," assists new companies with nailing down and shipping their products; they helped Brooke with production on her bike light.

Backers have also developed their own ways of coping with the Kickstarter process, though it’s mostly rooted in cynicism (see sites like Kickscammed or the subreddit r/shittykickstarters). Creators of severely delayed or failed projects—like Lima or ZPM Espresso, respectively—hear their backers' frustration, though insist those backers are the vocal minority. The rest are mostly patient, if frustrated, they say.

While Kickstarter can encourage resource sharing and preparation, it can’t change the central dynamic emerging between creators and the manufacturers who have to execute their vision. Kickstarter projects are relatively small, possible one-time clients often competing with big players. And when they can’t compete for attention, they can become stuck with delays and subpar merchandise. The only cure then may be more money and more time.

Recently, Kickstarter started allowing creators to change their post-funding campaign page format for product-oriented projects to a version with a "pre-order" button, even for products that have not shipped yet (per Kickstarter, the button layout can be customized to say whatever the creators choose). Before that, it wasn’t unusual even for projects in development hell to mount their own websites adorned with “pre-order now!” buttons, sometimes making a product look more finished and available than it is. The pressure is always on for a product to be done, even on a site that exists only to help projects get started.

In the end, the two forces governing the parameters a creator sets when making a project—money and time—are always negative pressure. A lower funding goal means a higher chance of success, and a nearer estimated delivery date means more excitement generated for backers. But the more optimism a creator has about their budget and timeline, the quicker they can find themselves stuck once funding is over. Knowles admitted he chose a shorter time frame for his Kolstom sunglasses reward delivery because he was "thinking people will be more apt to order the product." He said that crowdfunding's framework "allows entrepreneurs to cut corners," but he believes backers' anger toward him and his venture was misplaced.

"People were still not used to the fact that that you're not paying for a product," he said—a refrain that Kickstarter often repeats.

Kickstarter-as-store, though, is proving a tough paradigm to break because it’s such an attractive delusion in the short term. Creators get more money, backers get more excited, and Kickstarter thrives off the resources and enthusiasm. But just as sure as the short-term happiness comes long-term suffering: backers hit snags and roadblocks, backers feel deceived, and Kickstarter’s reputation takes a hit.

As for Zuta Labs and their little printer, the source of their delays were, again, lack of foresight and manufacturing troubles. As creator Daniel Rubin wrote to Ars, “We needed more time to make the product better and more functional—which ended up postponing shipment—and we ended up using a different ink cartridge than we initially thought.” As Zuta Labs told their backers, the creators decided to shrink the size of the printer after completing funding. "We, and you too, would love to see the printer as soon as possible, but we’ve decided that reducing the size of the printer is worth the extra wait," they wrote. That meant they needed a new custom cartridge, which the backers also wanted to be refillable. The ship date slipped and slipped.