Another big Kickstarter crowdfunding success has made the decision to migrate its campaign to competitor Indiegogo following the end of the project on Kickstarter. PUGZ, called the “worlds smallest wireless earbuds charged through your phone”, raised a hefty $1.43 million from over 10,000 backers on a campaign that closed today. PUGZ immediately turned around and listed its product on Indiegogo’s InDemand, an e-commerce option allowing interested individuals to continue to pre-purchase a pair of earphones that won’t ship until January. Kickstarter even makes it easy for its competitor by allowing campaign creators to change the button to “Pre-Order Now” linking to Indiegogo.
Kickstarter, of course, makes its money from successful rewards-based crowdfunding campaigns. According to its current terms, projects that hit their stated funding target must hand over 5% of the total amount raised, plus a fee to cover the Stripe payment processing. But once a project shifts over to Indiegogo, Kickstarter is losing out on potential ongoing revenue.
We Are Not A Store
Back in 2012, Kickstarter CEO Yancey Strickler proudly stated (along with his co-founders) that his platform is not a store. But things change, and since that time Indiegogo has recognized a compelling need for successful project creators to sell their product post-crowdfunding. Before InDemand, successful projects created their own e-commerce platform or signed up with another selling platform. Strategically, Indiegogo made it easy to keep the revenue coming in for creators, while adding to the coffers of Indiegogo. Perhaps it is time for Kickstarter to have a change of heart?
PUGZ signed up on Kickstarter to raise a mere $50,000. That amount was raised in just 9 hours as consumers flocked to the sleek set of bluetooth earphones and unique approach to piggy-backing on an iPhone’s battery. The project benefited from the fact that it is pretty much ready to ship. Backers should start receiving their PUGZ in November. Purchasers on Indiegogo may expect to receive a pair of PUGZ in January at a slightly higher price of $139 vs. the Kickstarter cost of $119. Full retail is expected to hit $199 at some point in the future. Indiegogo will keep 5% of any transaction using InDemand so Kickstarter is losing out on that revenue which is pretty much – easy money. Indiegogo will now be leveraging its network of tens of thousands of site users to promote PUGZ and boost sales. Good for both sides of the transaction.
Opportunity Lost
Kickstarter has always taken a more altruistic approach towards crowdfunding. At the end of 2014, Kickstarter announced that it had met the qualification of a Certified B Corporation as the company reaffirmed its stance of operating in a transparent and positive manner. This past September, Kickstarter became a Public Benefit Corporation meaning they must consider the impact of their actions on society – not just for shareholders. But does this preclude the platform from making decisions that drive more profit for the company – and value for its users? Nope.
Kickstarter should reconsider its stance on not being a store. It will drive value for crowdfunding project creators and shareholders alike. It would be pretty easy to create a Kickstarter Outlet, selectively allowing successful creators a vehicle to keep the money rolling in. There is no shame in being 2nd in offering a service similar to InDemand. It just makes sense.