There are three things about crowdfunding you need to know. The first is a fact: the US-based crowdfunding website Kickstarter recently announced that it would be accepting UK-based projects from the autumn. The second is a rather mind blowing prediction: that same site, Kickstarter, has predicted that it will outfund the National Endowment for the Arts in America, by raising $150m in the coming year.
For those that still need proof that crowdfunding has developed from a digital quirk into a powerful finance model, then take a look at Kickstarter's recently published stats page. And that third thing I mentioned? It's not about funding, but how crowdfunding is changing culture itself.
When crowdfunding first popped up, I was intrigued; it had an obvious, zeitgeisty importance, and not because it represented a technological advance or even because digital fundraising was a new idea. Talk to any savvy fundraiser and they will inform you the Royal Albert Hall was essentially crowdfunded and say: "Was that so very different from 'donate now' buttons?"
Ah, those buttons – pure pixelated hope if ever there was. The truth is, crowdfunding is radically different. Why? It has piggybacked on a confluence of technologies and social change, becoming nothing less than a financial harness for the digital collective. It's new because it gets that hard to define but 'internety' thing: a mass yet casual desire to innovate, take control and (most internety of all) have fun doing it.
No longer is online giving all about brain tumours and doing wheezy laps of Hyde Park dressed as endangered species. Charity has been unharnessed from tragedy and uncoupled from institution – it has become upbeat. Set aside the whole 'globalised collective' aspect and fun really is the defining aspect of crowdfunding.
You wonder if po-faced art will take a backseat to a movement that seems happy to fund a dinosaur hunt, a giant rideable spider robot and a papier mache replica of the Queen strapped to a barge. Lurking behind these madcap examples are real projects of interest. The internet clearly loves the wacky and instantly 'gettable' – will the serious suffer a terminal demotion?
From the moment this infamous statue of Robocop got funded you knew the internet's sense of humour was going to have a say. Consider that dinosaur hunt: is it possible that a useful scientific trip for students knew a straight bat would fail and had the digital smarts to rebrand?
And will art have to get wacky to get funded? Productions of the Cherry Orchard might be wise to include the odd piece of flying taxidermy, following the lead of the 'artist' who responded to the web's demands by creating the Catcopter. Behold a dead cat that flies. This piece might actually work on two levels, being both mercenarily viral and a self-embodied comment on internet culture.
The tweedier sections of society and many artists will no doubt feel a certain unease with all this but my feeling is that drawing out the fun to get your art or science project funded is no bad thing. Fun and happiness are deeply underrated as productivity catalysts.
Where else is crowdfunding going? Kickstarter has already blogged about local government interest. Soon it will announce that New York will have its own curated page backing projects that benefit the city – Portland already has one. This natural step into civic crowdfunding, where local citizens raise digital funds to improve public space, strikes me as a terrific development. But it throws up all sorts of issues around the nature of funding versus taxation, as highlighted by blogger Ethan Zuckerman.
And of course, civic crowdfunding isn't all about Kickstarter. The British site Spacehive has been at it for a while. It deserves mention for two things. Firstly the potential of crowdfunding for cultural dissent and political protest. Was the alternative Jubilee Queen's head likely to get funded by Arts Council England? It seems unlikely with vested interests in play.
Spacehive's second feat of note was funding the Glyncoch Community Centre. Take a look at the page and witness the funders involved. As well as public donations, the project received the lion's share of capital from the local council and corporates like Tescos and Deloitte. To my knowledge, this is the first modern example of what could become the new 'tripod' funding model: crowd, government and brands creating capital builds together.
At a time when business and government desperately need a new covenant with society, this is significant. Consider a controversial state-funded project like the Public arts centre in West Bromwich. Had the Public been partially crowdfunded, perhaps the bad feeling that marked its opening would have been deflected by the community's prior online connection.
And once you create a building, what about long term sustainability? This seems to be where the crowdfunding model falls down. Could it ever move from funding one-hit wonders to a subscription model? My instinct is no, although there are examples of repeat crowdfunded festivals like Peckham's Bold Tendencies.
Eternal crowdfunding campaigns seem waring. Then again any kind of marketing or grant application is tough, and as blogger Chris Unitt points out, crowdfunding encourages arts venues to focus on audience rather than their local funding rep. No bad thing surely.
That covers the changes in funding. How about that third thing I mentioned? Hold onto your hats and come back tomorrow. This is where it gets interesting.
Crowdfunding is changing culture
Crowdfunding has developed from a digital quirk to a powerful tool – this much we've talked about. But there is something even deeper going on with this new model, one that's less predictable than civic participation and far more disruptive.
Kickstarter itself is changing under the influence of digital culture. At first it was about making established forms of art. Film was big – documentaries about organic community vegetable gardens were not uncommon. Now that is changing. It is becoming a land of gadget makers and gamers.
The first million dollar project on Kickstarter was the Pebble watch. This device made technology wearable and Bluetooth enabled. It was creative but it wasn't art; it was a product. After this came the amazing success of the computer game Double Fine, which raised $1m in under 24 hours. Debatably this was art (for my money it was) but still very much a mass-market, digital product.
Is it possible that crowdfunding is telling us something rather profound – that the most important and popular form of creativity at this point in history is not 'useless' art, but digital invention?
I think it is. Take a look at the particular nature of the digital creativity that is getting funded in such grand style. Stompy the Giant Spider is a great example. Another is the recent phenomenon Ouya, which is at first glance a technologically underwhelming games console. Both projects are notably Open Source, unlocking them from proprietary systems so developers the world over can contribute to robot coding and game production.
When Kickstarter started out it decided not to prioritise (or curate) which creations were most important. It stayed away from the term 'art' and spelled out its mission statement as a new way to support any kind of 'creativity'. The public would decide what was important and increasingly their dollars are veering away from art to invention. A profound shift is under way – from the aesthetic to the interactive.
This new communal instinct can do amazing things like route around the warping influence of capitalism and digital platform wars. Look at projects like Open Trip Planner. This takes a bit of unravelling but basically the benefit of good maps on smartphones became endangered by Apple's titanic battle for market supremacy with Google. Apple are attempting to strip Google products like maps from iPhones and this left users with crappy transport info – Open Trip Planner is the communal answer to a hierarchical fall out.
Crowdfunding, then, is doing two important things that other forms of funding struggle with, changing our culture in the process.
Firstly, it is fostering the new 'maker' culture with projects like Stompy and Makey Makey. This latter 'invention kit for everyone' (and others like it) will surely play a part in the culture of innovation that UK state funders such as Nesta are desperate to ignite. In other words, crowdfunding is possibly the best place to bring art, technology and the economy together. Scroll to the bottom of WeFund's home page for more evidence of this with its Equity start-up fund or look at the brilliant Zombies Run! app created with Orange Prize winning author Naomi Alderman.
Secondly, it is a crucial method for routing around non-existent state funding or market influence that is stacked against public good in either the digital or physical realm.
Where this is all going is anyone's guess. For some crowdfunding is a flash in the pan, even problematic, force. Scour the web and you'll find the start of crowdfunding satire such as KickStriker, the site that came out of Clay Shirky's university class, or this cartoon in the New Yorker.
For me though, crowdfunding represents something amazing – the gamification of progress. The internet is pointing us in the right direction and crowdfunding, with that digital hallmark of mashing capitalism, communism and cats into one, is certainly getting to places other funding forms are too slow to reach.
These days, Kickstarter is close to a household name, raising nearly $500 million for books, movies, podcasts, design objects, food items and anything else someone might come up with. I just helped a coffee shop in Oakland buy a roaster. I helped Ze Frank bring back his transcendent video show. I backed my favorite menswear video series and blog. I backed an animation made of engraved wooden tiles. And yes, I backed the Pebble.
In fact, I back a lot of projects. That’s what I want to talk about. You can read about the success of Kickstarter lots of places. Instead, I want to talk about the effect Kickstarter is having on me: I’m slowly turning into an investor.
Most Kickstarter backers begin by effectively pre-ordering something they’d buy, if only it existed. I felt that way for a while.
But there are some problems with this attitude, and Kickstarter seems to be putting a great deal of effort into combating it. After all, even a successful campaign is the opposite of a sure thing. One project I backed is very clearly not going to ship. Many projects I back don’t meet expectations. And that’s where it gets interesting.
For one, I understand and accept the risks. I am no longer shocked when something goes wrong. Stuff happens. So now, when considering a project, I spend more time on the pitch video. I want to get a sense of the competence level of the people running the projects.
Also new: When a project succeeds, I get regular status updates. For industrial projects, like the Cubby, a “collar-friendly coat hook,” a whole tooling and refining process must be completed. It’s not enough to squeeze plastic into a certain shape. The plastic must shape easily and accurately, making the final project pleasant to touch. It has to be durable, and easy to produce. In the case of the Cubby, production stalled when the plastic started sticking to a metal tool. The creators explained the problem in detail, as well as possible solutions, and informed us backers when the issues were resolved. I used to find these missives tedious, but now I look forward to them. I enjoy the process as much as, and sometimes even more than, the finished product.
The upshot is that I no longer blink at the time it takes to produce a product or artwork. I know and expect Chinese New Year to cause lengthy delays. I expect a perfectly prototyped product to need time to mass produce. I expect film production to be a process, not an end point.
I knew my thinking had evolved when I backed Allegory. The pitch came from a guy in Chicago named Chad Schumacher. He wanted to make fancy pens out of reclaimed wood. I didn’t necessarily want one; I just liked the sense of the guy making the pitch. I wanted him to have a company so I could see what he’d do. For what it’s worth, my Dynamo is in my pocket right now. It’s a great pen. But I backed the person, with better results to show for it.
Equity
My experiences thus far have led me to wonder how the rewards and effects of Kickstarter might evolve. For most projects, getting the thing made is the main reward, particularly for art-oriented projects. There’s no offer of equity. Kickstarter CEO Perry Chen says as much explicitly:
We think the most disruptive aspect [of Kickstarter] is the removal of the investment component. People are supporting projects because they want to see them happen. It’s so different than giving money because you want to make a profit.
I don’t see how the investment component is removed; contributing money to something you believe in — something that may or may not work out — is what I would call investment, regardless of the reason. So I’ll assume Chen is really saying, “You can’t speculate on Kickstarter, and that’s great because it keeps out the riffraff.” I can see where he’s coming from. I backed Put This On because I wanted to watch the videos. Same with Ze Frank. I’m not betting on them in the abstract. I didn’t get a hot tip that they would make me a quick buck. There’s something to that.
But I think Mr. Chen is wrong, or perhaps disingenuous, to treat this as an either/or situation. I can give somebody money because I want him or her to succeed. Or I can bet on that person’s future success. Or I can do both at the same time. Perhaps Mr. Chen is thinking of the thrum of stock markets and day traders, not always understanding the companies they instantly buy and sell. I can appreciate the concern that this leads to investments that are not sound, that generate bubbles, as well as products nobody really wants. Insofar as a company like Kickstarter can act as a corrective to that, I’m on board.
But I can also imagine a win-win situation: say there’s a guy in my town who wants to start a hardware store (maybe an artisan hardware store). I may think he’s a smart guy with big potential, and I may also really wish there were a hardware store in town. And that’s how I tend to think of Kickstarter too — except right now, I can’t really bet on the person.
Mr. Chen and I disagree on what is disruptive. Helping previously lost-in-the-woods products like smart watches get built is a Big Deal. Helping books get published and films get made — books and films that might never have existed otherwise — is a Big Deal. But radically growing the pool of informed, interested investors, and safely training them on how to do it, on a potentially global scale, is a much bigger deal. The effects of such a shift could be long lasting and profound.
I’ve read a lot of writing about consumer culture in America, most of it negative. I’m not so sure a large consumer base is a bad thing. But consumption in the absence of investment does concern me. That’s what interests me about Kickstarter: not that they had a good idea, because I think lots of people had the idea. What interests me is the implementation. Where Kickstarter succeeds is in making many more people comfortable with participating in projects, and thereby more accustomed to an investment mind-set. This group and its comfort level are Kickstarter’s key asset.
Today, I’m just a regular guy with a pretty good salary. But what if I someday find myself truly wealthy? I will very likely want to grow that money, not just with slow-growth funds or even high-risk funds, but with actual developing companies. I enjoy the process too much not to give it a try. I want to talk to the owners. I want progress reports. I will be much better equipped when that day comes; I will be educated. Without Kickstarter, it’s hard to imagine reaching that point. I would never have thought of myself as “that kind of person.” No more.
I doubt I’m alone. It’s probable that at least some of the current crop of regular backers will become truly wealthy. The more Kickstarter and similar efforts grow, the larger the pool will be. If that group also wants to get more involved with the companies they create, we could see some very interesting effects. I can’t wait to find out.
Did the founders of Kickstarter anticipate the creation of an army of investors who might just change the world? Maybe not, but that just goes to show: when you do something interesting, the results are often surprising.