Is the Kickstarter spirit dead?

kickstarter_headerI want to talk about what I always thought the spirit of Kickstarter was about. Kickstarter is a great platform for new, innovative companies to test public interest in their new product as well as gather funding to get their new company started. People that think the product is a good idea will give money to the company. To say “thank you,” the company will normally give something in return such as schematics, a prototype, or a finished product after manufacturing is set up. This process allowed many innovative new companies to get the capital needed to get their company started and bring their product to the market. This seems to still be happening in the tabletop gaming industry, however the process seems to have been tainted somewhat.

Where before, Kickstarter was dominated by small startup companies trying to get off the ground, large or established companies have entered the Kickstarter market which is something that I would argue goes against the spirit of Kickstarter. They recognize the reduced risk and somewhat predictable return on investment they can achieve on the platform. Established companies have larger marketing budgets to be able to advertise their games a lot more than startups. The larger companies also have established manufacturing lines which in some cases can allow them to sell their games at a cheaper price than a startup company. The combination of these two factors hurts startup companies by taking market spend away. Backers have a limited budget and they too recognize a lower risk and better value by backing a large company versus a new startup designer. This pattern of larger companies using Kickstarter and lowering the funding of smaller companies is not necessarily bad. It forces savvy startup business owners into changing the way they do business if they want to make a break through.

If small startup companies are to survive and compete in the Kickstarter market, they cannot continue the old ways of running their campaigns. They have to find new ways to market and develop their products. They have to innovate in every aspect of their business now, not just in their product design. Gone are the days of putting up some sketches and rough drafts along with a description of the product. Now, backers are used to seeing professional graphics along with well thought out and tested marketing trigger words all designed to attract the attention and promote action by the viewer. Startup companies need to spend a lot more time — and sometimes money — in these areas if they want to have a chance at a successful campaign. I’m currently doing some marketing consulting for my friends on their upcoming game Nexus — if there is interest, I can share some secret strategies we are incorporating in a future blog. Anyways, even though larger companies have entered the market with some obvious advantages, it doesn’t mean that the smaller startups can’t take advantage of a natural weakness.

Large companies, in fact have a natural weakness. You see, they have a smaller tolerance for taking risk. Steady and predictable return on investment is what most of them are looking for. This avoidance of risk lends itself to products that are reproducible and somewhat predictable. This is not to say they aren’t cool or fun to play, it’s that they leave a lot of room for innovation by risk-taking entrepreneurs. I know it is tempting to follow trends that big companies are setting — after all, it is working for them. As we discussed earlier, the startup is outgunned in the “tried and true” market. This is where startups need to look for things that have never been done before. For instance, I have found many ideas buried in the comments section on Kickstarter on how customers want to purchase things a certain way or ideas on how to make products unique or better. Smaller companies are more agile and can take the risk to see if there is a big enough market to support doing business a particular way or making a product available in a different way. This is their secret weapon. Yes — you will have more chances at failure, but you will also have chance at incredible successes by finding niches that large companies haven’t carved out yet.

To sum it all up, the Kickstarter spirit is not dead, but it certainly has been changed by the influx of large companies. Smaller companies can’t follow the trends set by large companies, but instead need to be able to compete in the areas of marketing and need to take advantage of their risk-taking abilities by being innovative in product design and offerings. For the entrepreneur that can listen and learn from failures and successes, Kickstarter can still be a great place to both test ideas and raise capital for your new business.

I am sure I have left out a lot of angles on the intricacies of the Kickstarter market. Comment below and let me know your thoughts on the condition of the Kickstarter spirit.

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