Kickstarter is considered the most famous and largest crowdfunding site in the world. You have an idea for a specific product but don’t have the money to execute it alone, so you perform a pre-sale on Kickstarter targeting specific sales. However, this concept upon which Kickstarter was founded is not what is being applied, as we often see famous companies going to raise funds from Kickstarter or other crowdfunding sites. So why?
Do you remember the company Pebble, which is considered the actual innovator of smartwatches in their current form? In 2012, it was a new company, so it introduced its first watch and raised $10 million in funding… but we were surprised to see it return in 2015 with a new version to raise funds, achieving $20 million in sales, and then a third time in 2016 with a third watch, raising nearly $13 million. Look at these numbers and you will see that Pebble was an unknown company in 2012, but it made millions and became famous. So why return to crowdfunding sites even though it has the ability to fund its products?!!
Another example is the earphones we talked about a few days ago, produced by Zolo… Zolo, for those who don’t know, is a brand owned by Anker, which is one of the most famous and largest accessory companies in the world, having achieved sales exceeding half a billion dollars (an estimated figure). So why raise funds for earphones? Anker said it was targeting $50,000 in funding; is the company unable to afford this amount?! Anker may have spent more than that on its scientific research. So what is the secret?
Free Advertising
What does any company do when it launches a new product? It’s advertising, of course, and this applies even to the largest company in the world, Apple itself. Sometimes a large part of the product’s cost is the advertising itself, not the manufacturing (like Pepsi and Coca-Cola drinks). Kickstarter provides something magical, which is free advertising. In fact, Kickstarter doesn’t provide it directly, but there are millions from all over the world following this site, and the last report I read mentioned the participation of 10 million people in funding operations with total amounts exceeding $3 billion. So, you are in front of a magical place; just put your product in it and millions will see it. Imagine millions seeing a product from a famous company they know and trust?!
Another point is that hundreds of specialized websites follow crowdfunding sites—including us—so when we see a unique product, we write about it (for free, by the way). This happens repeatedly with many sites. All of this is free, whereas if they wanted all these sites to write about them, they would pay hundreds of thousands of dollars (there might be paid sites, but the majority are free).
Testing a New Product
Another advantage of Kickstarter is that it enables you to achieve sales before manufacturing. Based on that, you can judge your product. Often, or we can say always, it is a product different from the traditional as we saw in the Liberty earphones. A new feature and an important update in a specific product might please the market and might not. Of course, Anker can conduct market research, but is there anything better than Kickstarter? Display your product and you will see the supply and demand for it… The product will be offered at several prices, so you can know the critical point that, if your product’s price exceeds it, sales will decrease significantly. All this before you issue an order to the factory for production.
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