Avoid a Crowdfunding Backlash When the Crowd Gets Ugly
When Brooklyn, N.Y.-based Kickstarter came onto the scene in 2009, it promised to upend the age-old traditions of funding art projects. Instead of seeking wealthy patrons or government grants, creative types would ask for contributions online in exchange for tokens of appreciation.
The crowdfunding concept caught on. Some 5.7 million people have since pledged over $1 billion to fund more than 57,000 projects, most in the $1,000 to $9,999 range. But some Kickstarter campaigns — successful and otherwise — have drawn the crowd’s ire. Observers have likened some fund-seekers, particularly small-business owners, to being little more than digital panhandlers.
In October, for example, the Chocolate Room, an eatery in Brooklyn, N.Y, posted on its blog that it had started a Kickstarter campaign to raise $40,000 to help fund a move to new digs. The lease in its then-current location of 10 years was about to experience a huge rent increase. “Building, as you can imagine, is very expensive,” wrote co-owners Jon Payson and Naomi Josepher, “so we need your support to create our new home in the neighborhood we all love!”
Almost as quickly as they’d launched their enthusiastic campaign, the vitriol began. “There’s something about asking your customers to help fund your expansion that just feels a little ... wrong,” wrote a local blogger who actually likes the place. That was just the tip of the iceberg. Comments from her readers began pouring in, many questioning why customers should be asked to support a failing business model.
The Chocolate Room isn’t alone. Lynette Krajewski started a campaign to raise $50,000 to open Community Oven, a bakery and pizza shop in Rockland, Maine. Her campaign failed to meet its financial goal, and Krajewski received quite a few disparaging comments to boot. “We would not try a Kickstarter campaign again,” she tells The New York Times. “It was very emotional.”
How to Avoid a Backlash
Thinking of starting a crowdfunding campaign? To avoid a backlash, Don Steinberg, author of The Kickstarter Handbook, suggests anticipating how your prospective backers will respond to your request.
“Some of these reactions remind me of when I graduated college and the university, which has substantial real estate holdings, asked me for a $50 donation,” he says. “You shouldn’t be sticking your hand out asking for money with a silver spoon in your mouth.”
Steinberg reminds entrepreneurs that Kickstarter was founded to help bring cool creative projects into being and not to start a business or expand an existing one. “People want to feel like they’re part of creating something exciting, not paying for the plumbing repairs you need,” he says.
Jamey Stegmaier, a board game designer and publisher who has run three successful crowdfunding campaigns and backed 100 more, writes about Kickstarter on his blog and Crowdsourcing.org. He explains that negativity is common on Kickstarter. It “literally happens on every campaign, even the best-run, most successful campaigns,” he says.
“Pledges made on Kickstarter aren’t donations, and projects that treat them like donations have a much lower success rate than projects that offer attractive rewards at a fair price,” Stegmaier says.
3 Tips for Succeeding on Kickstarter
Stegmaier offers quite a bit of advice to would-be Kickstarter campaigners, including:
1. Back other projects. Even if you pledge just $1 each, you’ll have the opportunity to see how Kickstarter campaigns work and evolve.
2. Offer appropriate incentives. Your awards to contributors should reflect the level of their contribution. (This was a frequent complaint among those who chided the Chocolate Room’s owners.)
3. Manage “toxic backers.” Stegmaier suggests letting the staunch supporters in your crowd deal with negative commenters, responding non-defensively, driving them into a private conversations offline, and, if necessary, reporting them to Kickstarter, which has rules against abusive behavior its pages.
The takeaway here for entrepreneurs isn’t so much one of “be careful what you wish for” as it is “be careful whom and how you ask for money.”
As one critic of the Chocolate Room’s crowdfunding efforts put it: “There are these NEW, AWESOME places now called, get this, BANKS! Now, you’re never going to believe this, but banks actually give you money to do such things as build out and expand a new business.”
And at least if you ask banks for money and don’t get it, they won’t write nasty things about you on their blogs.
Dave Clarke is a business writer for Intuit and is passionate about solving small business problems.