The New Model of Crowdsourcing: Kickstarter and the Need for Digital Change
While crowdsourcing has existed in one form or another for centuries, its most recent iteration online has opened the floodgates to a world of ventures; some well received, others readily ignored.
Kickstarter’s model of focusing on creative projects rather than personal finance and general business pursuits has given it a unique place in the crowdsourcing world. It has driven a change in behaviour towards investment, transforming the online community as a result.
Charles Adler, one of the three founding members of Kickstarter, recently appeared at the Binary District x Strelka Summer Programme. Speaking on digital business evolution, he gave a fascinating insight into his personal experience with this far-reaching shift, and how consumers have become more involved in crafting their digital products.
Kickstarter and the Need for Digital Change
At the time of writing, Kickstarter has funded 149,593 projects. Charles and his fellow founders, Perry Chen and Yancey Strickler, have created a stable, secure and vetted platform that allows for the propagation of creative projects online, with the social aspect of a universal investment opportunity.
“The results of this industrialisation [of the creative industries] led to fewer and fewer unique ideas coming into the market.”
Charles explained the driving force behind the website’s inception in 2009, which reflects what he saw as a problem in the digital creative space at the time.
“I would say for the three of us, what we were fighting against was this industrialisation of the creative industry or creative industries, thinking about film, journalism, writing, product design and so forth,” Charles said. “The thing that we were very frustrated by was the fact that the results of this industrialisation led to fewer and fewer unique ideas coming into the market.”
Adapting Established Processes
Kickstarter’s mission was to bring more ideas to market. However, it also had to evolve to reflect a much larger social digital movement that has seen giants like Facebook and Twitter gain such a foothold.
Business models have had to change in order to factor in the need for companies to have a social media presence, which involves giving their customers an established voice in the product’s framework.
“I think where most established companies suffer is from established thinking.”
“I think where most established companies suffer is from established thinking,” said Charles. “We keep thinking that the thing that we're doing is oil or building infrastructure for telecommunications in a way that has been done before, or it's about selling newspapers, but really it's about providing truth right and providing content which is the vehicle to that truth.
“Unfortunately that's where Facebook or Twitter kind of end up eating up the old business model.”
The New Model is Flexible
The digital business landscape continues to grow more complex as the scope for user participation and interaction increases. Kickstarter reflected this as its user base expanded, which in turn generated an increased range of project categories and greater audience reach.
Charles explained: “The first couple of years was predominantly arts. That's where we started, and very quickly a couple of other categories came about – one was product design, the other was video games.
“I don't make video games, so I'm not part of that community. I didn't know the hardships of what it took to bring a video game out in the market but they knew, and they found Kickstarter and they started utilising it. So suddenly we were serving another market.”
Shifting Target Audiences
As Charles pointed out, the potential for audience expansion for a product or platform can exist when the platform is flexible enough to expand and fit the developing demand. Every business needs to base its foundations on a set target audience. Once established, though, Charles noted that these businesses need to be “thinking more socially about who it is that you’re serving.”
This careful consideration of the audience is even found in the tech giants that have billions of users. As a digital platform undergoes development, Charles pointed out that a key method of rolling out these updates is to a small, defined subset of the audience:
“I would say one thing that I find fascinating about Facebook, outside of all the bad stuff that we hear about, is how they deploy features, right. Each feature is deployed to a very small micro-audience, and if it works, they consider opening it up to a larger audience… I think there are new mechanisms, new methods that one can use to roll out and test if an idea is worth pursuing, and learning from the Ubers and the Facebooks and the Foursquares is actually kind of interesting.”
Collaboration at All Stages
Thinking socially about who a business is serving goes back as far as the actual development of the initial product. “I was always fascinated with Meetup, because it was using the value of the Internet to go hang out in the real world,” said Charles.
After he helped found Kickstarter, Charles used his own platform to seek funding for a new project which aimed to foster collaboration in the arts and tech communities.
“When you gave them collective space and gave them a mission to create an object of their fancy, suddenly you're creating a communal environment.”
“Some amazing things happened in the space – things got made, both art and technology,” Charles noted. “In the course of that month, community happened – when you gave them collective space and gave them a mission to create an object of their fancy, suddenly you're creating a communal environment, and you're gonna talk to the person sitting next to you...and so suddenly connections are made.”
Sharing Ideas Leads to Tangible User Interest
The potential for co-working spaces and the ecosystem of collaboration that they foster can be extended to the online sphere too.
Charles said of the benefit of crowdsourcing user input that it is a “fascinating way to attract people to an idea is to share the idea; whether it's sharing it here, or posting it on Medium, or posting out onto the Internet to talk about the problem that you're trying to solve.
“Suddenly, you find people gravitating to you because you invited them into the solution. So you’re not looking at it as sort of the old-school way of like, ‘here's my business card.’”
The Changing Nature of the Business/Customer Relationship
As audiences increase and diversify, so too do their demands. However, the presence of an increased user base does not necessarily mean that the products they are demanding are all digital. This is clearly indicated by the breadth of projects funded on Kickstarter, but it can also be seen in the platforms of tech companies:
“More and more people refuse to be online – they appreciate offline experience, said Charles. “Airbnb and Uber are great – they are native to the Internet, but they're leveraging both to create an experience offline… we're in this world of change where definitions are getting switched around, where divisions are getting broken up.”
Charles pointed out that the rapidly changing rules surrounding product development and the user’s participation and consumption of this is a hugely exciting area of R&D:
“There was this realisation that I had which is the fact that the rules that were in place were always very feeble anyway, and they were constantly getting changed and turned. It just took longer for those cycles to happen right, and these cycles are happening far quicker right now, and that's scary for some. I actually find that to be incredibly empowering and exciting.”
Kickstarter as a company is a strong embodiment of the increasingly social structure of today’s digital environment. The importance of consumer input in a product’s inception, development and testing is being extended across various companies’ structures, and this is also morphing into the proliferation of co-working spaces.
“These shared working environments are a reflection of a larger socially-minded business model.”
These shared working environments are a reflection of a larger socially-minded business model, one that larger companies have successfully adopted while maintaining their more traditional internal structures.
Whatever the magic formula may be, there are some projects on Kickstarter that stir up an incredible amount of interest. Currently sitting top of the all-time backing chart is Pebble Time, an e-paper smartwatch with a long battery life and smart functionality, brought out way before the more expensive Apple Watch.
The company’s value has since plummeted, though, with competition from the likes of Apple diluting the market and proving that being first to market doesn’t always guarantee success. At its peak, Pebble was worth some $740 million, whereas it now sits at around $40 million. An investor turning an initial investment offering of $100,000 into a $40 million company should be celebrated, but you can’t help but feel there’ll be some regret within the boardroom.
Illustrations by Kseniya Forbender
To contact the editor responsible for this story:
Margarita Khartanovich at [email protected]