In addition to seeking seed funding, many of the startups are commencing or have already launched Kickstarter campaigns. Engaging in crowdfunding may reflect the unwillingness of the VC ecosystem to fully back hardware-based efforts, but it may also speak to the lack of staying power for quirky, fun gadgets, which are a dime a dozen on Kickstarter and other similar sites. While many of the products presented at the demo day were indeed colorful, fun, and eye-catching, I wondered whether their creators had harnessed the full potential of the fast product iteration and vast component availability of Shenzhen touted by the HAXLR8R team. Many of the ideas seemed to address decidedly first-world desires or needs, rather than the stated goal of “solving real problems or creating a meaningful change to our current technological state.”

Ironically, one way some of the startups are innovating is not so much with their product or design, but in their business model. Some of the companies are using their apps or software as a Trojan horse for the actual hardware product, while others are using platform-as-a-component plans. One company is just going for the “sex sells” strategy (literally). Here’s a recap of HAXLR8R’s inaugural class last year, and below are this year’s top six startups to watch.

LightUp

The brainchild of two Stanford students, LightUp is like a digital erector set. Magnetic snap blocks let kids build working circuits and learn about electronics through trial and error. Besides the physical play kits, which will be available via Kickstarter for $30-200, LightUp also has an augmented reality app that acts like a tutor and lets you visualize current flow in a circuit. The Arduino-compatible system is powered by a button battery, can be used for building all kinds of electronics projects, and will be launched at select partner schools in August.

HEX Air Robot

Chinese company HEX is betting that the FAA will follow through with opening up the skies to commercial drones in 2015. They’ve developed a modular auto-pilot system that they will sell to the DIY drone community, as well as two drone bodies, the smaller of which will debut on Kickstarter next month. Hex’s system also includes an app to launch, land, and have the drone follow the user like an airborne puppy. For photo enthusiasts, the mini HEX includes a camera, and the full-sized drone has a detachable auto-balancing arm for GoPro camera integration.

Molecule Synth

Honeycombs meet Legos in the build-your-own musical instrument from Molecule Synth. It has color-coded parts for pitch control, sound generation, and sensors, and can hook up to an iOS device or a keyboard. A mobile app lets users share compositions, and an upcoming Bluetooth module will give the synth drum machine capabilities. This is definitely the kit for music geeks who want a hyper-customized system, or DJs who want to out-Skrillex Skrillex.

Helios

Helios’ mission is to solve the dual dilemmas of safety and security for the hipster biker. Not only does the high-tech handlebar have blinker indicators for turning, it has a built-in super bright leadlight and a GPS tracker. An iOS app lets you change the blinker colors at will, and can even coordinate the indicators with turn-by-turn directions. The $199 bullhorn or drop bars also have two built-in rechargeable batteries and a dedicated battery for the GPS, giving you a 15-day window to find your bike (or probably just the removed handlebars) should it get stolen.

Spark Devices

Spark makes hardware connected with its Arduino-compatible Wi-Fi chip that can be embedded into existing electronics. This “core” tech is gaining traction with early adopter hobbyists on Kickstarter. For enterprise, Spark provides a cloud service that lets Spark-connected devices connect to each other or online services via a REST API. For more on Spark, check out Stacey Higginbotham’s recent post.

Vibease

Most other devices are smart now, so why not vibrators? Vibease has over 1,000 pre-orders for its $99 rechargeable Bluetooth vibrator. Their companion “fantasy marketplace” app aims to be the iTunes for erotica, with crowdsourced audio fantasies that synchronize with the vibrator’s intensity. The app plus licensing of the Vibease chip to other sex toy manufacturers will form the core of Vibease’s business model.

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“It defeats the whole purpose of Kickstarter,” he said, arguing that Kickstarter should instead be for indie filmmakers who don’t have access to the studio system.

He went on to say:

“The next Kevin Smith is out there… somewhere. He (or she) just needs a break, which is what Kickstarter is supposed to provide. Zach Braff can find his money elsewhere.”

Levine’s post struck a chord and went viral, leading him to follow up with another piece Wednesday. In it, Levine shares his thoughts about another major Hollywood Kickstarter success story: the Veronica Mars movie starring Kristen Bell. Veronica Mars creator Rob Thomas took to Kickstarter in March to fund a movie reunion of the show’s cast, and hit his goal of $2 million in 10 hours.

The Veronica Mars Kickstarter was unique because it came with the blessing of Warner Bros., which is going to produce the movie. Thomas had tried for years to get Warner to front the money, but only got the project greenlit after Kickstarter users opened their wallets. “Kickstarter was a luxury for Braff, a necessity for Thomas,” acknowledged Levine Wednesday. But he added that the real winner may have been Warner:

“They get a possible hit movie, they didn’t have to lay out a cent for production, and they don’t have to share the profits with the investors. They give them T-shirts and souvenirs and they’re off the hook. How sweet a deal is that? On a project they didn’t even believe in. What a win/win. ”

Of course, there’s a flip side to this, as our own Liz Miller argued earlier this year: At this point in time, Kickstarter is still growing — and big projects with big names attached can help to bring new audiences to the crowdfunding site.

But the controversy also points towards a bigger issue for Kickstarter and the types of projects it accepts. If patrons feel as if they’re being asked to pay for projects that have no trouble getting funding elsewhere, then they might start to question the entire idea behind crowdfunding.

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If launching the project via Kickstarter was a gamble — and one that apparently took a certain amount of convincing before Planet Money’s corporate masters would sign off on it, according to Blumberg — it certainly seems to have paid off: the campaign hit its goal in a single day, and has since raised about $300,000 or six times as much as it was originally looking for (the audio of my interview with Blumberg is on SoundCloud and also embedded below).

Crowdfunding and public radio both go direct

Blumberg, who works for This American Life and created the Planet Money show in 2008 along with NPR economics reporter Adam Davidson, said that when the show decided to set up the T-shirt project — an idea that stemmed from a book by Pietra Rivoli called “The Travels of a T-Shirt in the Global Economy” — he thought Kickstarter was the most obvious way of allowing listeners to not only follow the experiment, but to become participants in it as well.

“We wanted to try and figure out a way to do the project, to do the journalism, but also to sell the T-shirts to people who wanted them, as a way of involving them in the project — so you can either guess about how many you need and borrow the money or sort of get it pre-funded, or you could just go on Kickstarter and find out exactly.”

One of the reasons why it seemed like such a good fit, Blumberg said, is that public radio and the NPR model already involve reaching out to listeners and supporters directly, so it seemed natural to blend the two (a public radio podcast called 99% Invisible took a similar route last year and raised more than $180,000).

“The other part about Kickstarter is that it’s just a great way of sort of involving folks in the project as you go along, and… it felt like with our audience there’d be some interesting overlap there between Kickstarter and public radio — it felt like they would sort of feed on each other. The public radio audience and the Kickstarter model are so close anyway, so why not combine them — it’s sort of surprising that it hasn’t happened before.”

The internet turns everything into public radio

In fact, Blumberg said, it feels like “the internet is driving the entire world towards a public-radio model” in a way, as more media companies — and even individuals such as Daily Dish blogger Andrew Sullivan, who is relying on direct reader funding for support — try to find a way of surviving when advertising revenue is declining and other business models are not obvious.

“You can get lots of stuff for free now, and so the trick is to get people to pay for stuff they can get for free. It’s a trick that public radio has gotten pretty good at, but now other people are sort of eclipsing us — Kickstarter is very ingenious in the way you can involve people in the story, you can build all sorts of different levels, and it’s very very easy. So part of it is about learning what we can from our Kickstarter experience and then feeding that back into the public-radio world.”

Blumberg said that he was pleasantly surprised at the amount of money the project has been able to raise, and that he originally expected it would take most of the campaign’s time limit to even get to the $50,000 goal. The majority of the money raised will go towards travel and production costs, as well as the cost of buying and making the shirts, he said — and anything left over will be used to create a development fund for NPR member stations and put on a series of workshops about the kind of reporting Planet Money does.

A chance for a public-funding revolution

And will evangelizing Kickstarter be part of that program? Blumberg said that the project seems to be doing its own evangelizing, just because of the overwhelming response, which he says executives at NPR and throughout the public-media world are watching closely and are “very excited about.” The American Life producer said he also hopes the project will spark more discussion about the ways in which public radio can use crowdfunding platforms.

“Public radio has been a little insulated from some of the ways the internet has changed other media organizations, but the internet is upending radio as well, in a way that I think can be very advantageous, it just depends on how you do it. I think there’s always been a realization within the public radio system that there’s revolutionary potential, and I think this will add to that conversation and hopefully move it forward.”

Blumberg said that he believes public radio can learn a lot from seeing how crowdfunding works in practice with a focused project like the T-shirt campaign, and that the connection between fans and creators that Kickstarter and other platforms help to create is very much like what public media has been doing for some time without the internet. “I feel like we’ve been out ahead of this whole thing for a long time,” he says, “and we didn’t even know it.”

Post and thumbnail photos courtesy of Flickr user Christian Scholz and Shutterstock / Wilson Rosa and Shutterstock / higyu

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Spark Devices, a startup that’s part of the HAXLR8R incubator in China, has launched a Kickstarter campaign for its Spark Core hardware and cloud service that advertises the first two ideas, but CEO and Co-founder Zach Supalla hopes that the last example is where the market eventually ends up. The company’s Kickstarter is already funded after a mere 75 minutes (the goal was a relatively low $10,000), but the hardware isn’t the really exciting offering here.

Essentially the hardware is an Arduino with the nicest Texas Instruments Wi-Fi shield attached. A shield is what people add to their Arduino boards for extra functionality. They come in all kinds ranging from LCD screen to Wi-Fi. But the point is that anyone can make this: The real value is, as Supalla said, in the software.

In a chat this afternoon Supalla explained that the company’s four employees have been coming up with the Spark Core idea and platform since its first Kickstarter project (and business idea) failed. They had offered a connected light bulb called Spark Socket just a few weeks after the Philips Hue and the LIFX light bulb came out, and apparently the market for connected lightbulbs was subsequently saturated.

Supalla didn’t let that slow him down. Like several other companies he recognized that while there are hundreds of thousands of makers out there willing to play around with connected devices, there were literally millions of people who would love to have the same kind of toys that DIYers hack together in a more polished form.

But the price of delivering that polished form was too high for Spark Devices; plus, there’s more value in software as open hardware becomes more tenable for businesses building consumer-grade hardware outside of DIYers. So Spark really wants to make the same play that Electric Imp is attempting, offering connectivity in an easy-to-integrate package with the primary value being a cloud-based platform for hosting and writing the code to build services associated with those connected devices.

In short, it’s another platform as a service for the internet of things. Thus, with the hardware components it is most like Electric Imp, but on the software side it competes with a bunch of companies such as Carriots, ThingWorx and likely many more.

So for those of you excited about pulling together a Wi-Fi powered RC car or a connected web cam, this project and hardware is for you. But to build a big business Spark Devices is going to have to entice more than makers.

The good news is the team knows this, and has a small amount of seed funding to get it started. Let’s see what happens.

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The Atom is made of two parts: a small generator with electronic power regulation and a removable battery pack with a USB port.  Most bicycles with a quick-release rear wheel can use the Atom, which sits between the rear tire and bike frame. A USB cable can be run from the Atom to a charge a mobile device while riding, even as the battery pack recharges. Here’s how it works:

Taking the Atom’s battery pack with you when leaving your bike is a snap; just remove it when you lock up your bike. I like the fact that the battery pack pulls “double duty”: You can recharge it through a conventional outlet as well. With a 1300 mAh battery capacity, a fully-charged Atom should recharge an iPhone to about 70 percent full. Handsets with larger batteries — say the new Galaxy S 4, for example — would only get about 40 to 50 percent of a recharge with the Atom.

The project is hoping to raise $85,000 by May 23 and it’s well on its way already: At time of writing, over $55,000 were pledged. The first 300 early-birds already committed a discounted $85 for the Atom, so if you want in now, you’ll have to fork over $95. The project founders expect to sell the Atom for $105, so you can still get a discount now. Delivery estimates for the Atom are November.

Are there cheaper ways to recharge your devices? Of course there are. But this product is perfect for heavy bike commuters. And when I take weekend rides, I often use my phone to track the ride via GPS so I can get speed, elevation and other data. The apps and radios to make that happen aren’t kind to my phone batteries, so the Atom would be a great companion for those activities too.

This post was updated at 6:11am, April 26, to accurately reflect the product name.

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For Electric Imp the partnership is a validation of its approach to the internet of things and a chance to help bring a proven model of innovation to the hardware hackers trying to build products for the internet of things. It’s also a showcase for the new hardware development model pioneered by Quirky and taken even further by crowdfunding sites such as Kickstarter and Indigogo.

Last Thursday, GE said it would open up its hardware patents for a Quirky-sponsored design competition. The goal of the competition it to bring a few connected devices from idea to physical product in time for the 2013 holiday season. From the blog post announcing the partnership:

GE will open thousands of its most promising patents and new technologies to the Quirky community for the development of new consumer products; and a co-branded product development initiative to build a full line of app-enabled connected devices for the home in areas such as health, security, water or air that will be developed using advanced manufacturing tools and technologies. This new line of products will be co-branded Wink: Instantly Connected.

GE will open up patents in the areas of optical systems, including holographic and fast-focusing lens technologies, GE’s Ultra-High Barrier thin-film technology to protect electronics form the elements and GE’s telematics and asset tracking technology. Add in Electric Imp’s connectivity modules and the cloud backend and inventors can create connected products that could become powerful monitoring applications that could be used for environmental scanning, security and a variety of other purposes.

The collaboration between GE and Quirky has an April 17 deadline, which is pretty quick, but there will be later iterations of the competition as well. The idea reminds me somewhat of the Innocentive model, where corporations post research challenges online in the Innocentive community and entrepreneurs or researchers post answers.

The challenge in the research business was in finding ways to crowdsource solutions to complicated problems in a way that enticed people to participate. In the burgeoning hardware development movement there are several challenges, including a possible patent thicket innovators have to clear. There are also the complexities of getting connectivity into devices and then building out services that can use that networked hardware. Designing a physical product for manufacturing is another area where startups can fail.

Thus, this partnership tries to eliminate as many stumbling blocks as possible, which is why it’s worth watching.

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In case you’re not familiar with the Pebble, here’s a quick description from the SDK page:’

“Pebble is a customizable, Bluetooth-enabled smartwatch that connects to iPhone and Android smartphones. It features a 144×168 1-bit display, a 3-axis accelerometer and a Cortex-M3 ARM microprocessor. Pebble can be customized by installing new apps developed with its Software Development Kit. The SDK allows developers of all experience levels to build Pebble-enabled applications using a number of popular programming languages and technologies.”

Developers should be able to tap into the Pebble accelerometer for their apps while also taking advantage of the sensors and data on a paired iPhone or Android device. For now, the SDK appears to support custom watch faces but will be expanded for functional applications.

RunKeeper was previously reported to be one of the first applications to work with the unique smartwatch, perhaps allowing for runners to glance at their wrist for pace, time and distance information, for example. So let’s go developers: It’s time for some Pebble watch faces!

Update: This post was updated at 3:02 pm to specify the SDK is only for watch faces at the moment.

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The original story, as told in first person on the Kickstarter page, is a great feel-good tale: Mackenzie Wilson talks about how she boasted to her older brothers that she could design a video game, and they didn’t believe her. So she asked her mother Susan if she could go to a STEM camp (which stands for science, technology, engineering and mathematics) at a local university, where she would be able to study computer games and eventually design one of her own. The original goal for the campaign was just $829.

An inspiring story that turned sour

After the campaign got picked up on Twitter and elsewhere, Mackenzie and her mother raised more than $10,000 in less than 24 hours, and that figure quickly grew to more than $22,000. As with the bus-monitor story, many people seemed inspired to donate far more than was required because they wanted to support the girl and her desire to do something positive. But what happened next shows just how quickly the attitude toward such crowdfunding efforts can reverse itself.

As reported by the Daily Dot, a member of Reddit raised red flags about the campaign with a post about Mackenzie’s mother — including the fact that she was a self-declared multimillionaire entrepreneur who sold a company she co-founded to Kinkos for $100 million, was an entrepreneur-in-residence at Georgetown University, and ran several different businesses, including one that helps banks get money back from customers who default on their loan payments.

The post also included screenshots of a series of identical tweets asking celebrities such as Lady Gaga to promote her daughter’s campaign, something that is against Kickstarter rules.

Wilson told the Huffington Post that she didn’t expect this kind of reaction, and that she never claimed the family couldn’t afford to send her daughter to computer camp. She said that she viewed it as a way of encouraging Mackenzie to stand up for herself and raise her own money for things, like a lemonade stand might have in the past. She also pointed out that there is nothing in the Kickstarter rules that says it is only for people who can’t afford the thing they are raising money for, saying: “I don’t think it’s a need-based system.”

As the Reddit campaign against her picked up speed, Wilson said she was the target of death threats and offensive comments, and that she was afraid to let her daughter find out about how much anger her campaign had caused. In the comments on the Kickstarter page, she said: “I wish I could find a way to make this stop. I’m tired of fighting.”

Crowdfunding campaigns rely on trust

What’s fascinating to look at is how the tone of the comments on the Kickstarter campaign changes over time: at first, they are resoundingly positive, cheering for Mackenzie and her mother for encouraging her to do this. Then after the information about Wilson’s background gets posted, they turn more negative — but there are still lots of people telling her she is doing the right thing. Over time, however, the number of negative responses increases, and some commenters start to question whether it was even Mackenzie’s idea, and criticize Wilson for saying she plans to identify her attackers.

For me at least, this episode feels a lot like what happened to musician Amanda Palmer when she raised more than $1 million from her fans in less than two weeks for a new album and tour. Even though she detailed exactly how she would be using the money, there were still questions raised when she started to invite musicians to play with her for free as part of the tour. She eventually had to respond to those criticisms publicly and repeatedly, and pay the musicians the standard rate.

The lesson from both of these incidents is the same, I think. If you are going to appeal to the crowd for support, then you are essentially striking a bargain with them: they provide money, but you have to do more than just provide whatever the end product is. You have to be as open and transparent as possible and do whatever you can to maintain the trust of those supporters, and that changes the dynamics of the situation completely. And once that trust is lost, the game is effectively over.

Post and thumbnail image courtesy of Flickr user Christian Scholz

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HashTag It: When talking about Twitter, the at-name and hashtag are its calling card. And last week, hashtag hit the big time when it was copied by Facebook. And yeah, Yahoo’s Flickr started using hashtags as well. Capitalizing on the organizational capabilities, Flickr has already updated its mobile platform to include the hashtag, while Facebook has plans to use them to group conversations in an upcoming facelift. The reason why people are falling in love with hashtag: it makes clustering of data easier, which in turn makes it easy to — guess what — inject appropriate (contextual) ads. HashTag is the new like, or whatever.

Kickstarting a Revolution? Lucky sevens again! A seven-year absence can’t keep “Veronica Mars” fans down — they helped to fund the biggest film project in Kickstarter history this week as The “Veronica Mars” movie raised its goal of $2 million in two hours. Some might say that the project will allow other beloved, canceled-before-their-time TV shows to continue their sagas on the silver screen, but some filmmakers are wary of the precedent this “little” project’s success is setting — asking fans to pay to get a movie made, then forcing them to pay again at the box office. It’s true that the movie’s production costs will be covered by the contributions, but after the wild popularity of the project, Warner Bros. has decided to green-light marketing and distribution costs. Obviously, this leaves a bitter taste in the mouths of artists, as “The Man” stands to profit from the films’ success, instead of the ones who opened their wallets to get the thing made in the first place.

Keeping It Real: Let’s just say we are smarting from the death of Google Reader and that is why we (and we are not alone) are wary of Google’s newest offering, Google Keep. Keep is a note-taking, Evernote-competing, web-clipping app that drops saved items into your Google Drive for storage, and syncs across all your devices for easy access. Sounds great, but we are staying away.

iWatch or iNot: We have been privately musing that Apple’s iWatch might just be a head fake, a way to throw off the rivals (and even insiders at the company) and send them on a wild goose chase. Our theory is that we might see something else that is along the lines of a watch, is wearable on a wrist and is focused on health. Why? Because we think that is a bigger market, regardless of what techno-watch wearing friends of ours say.

Apparently we are not alone in our conspiracy-theory like thinking. Jean-Louis Gassee (formerly of Apple) also mused about this on Twitter. He was of course reacting to this article about Google’s watch plans, just like Samsung’s watch plans. Not to be mean or anything, one has to wonder why Samsung (and Google) have not invented (or reinvented) a new category since you know, the iPad launch. Maybe waiting for Apple to announce something?

What can Google Glasses do? Open the garage door and handle the fridge, along with giving you a lot of details about people around you. We admit, we are GG nerds and will be looking forward to its release, for we know that our focus on keeping Google (or for that matter anyone else) on its toes doesn’t win us many friends.

Sean Gourley, Co-Founder and CTO, Quid Structure Data 2013 Albert Chau / itsmebert.com

Less data science, more data art: In 2009, when we started talking about using data to think smartly about the world around us, I (Om) pointed out that “data is the new plastic.” We can create nasty landfill or amazing furniture from plastic, and data is the same way. It has been a while, but finally people are glomming on to that idea. And it was the common theme at our fourth Structure Data conference in New York. Here are some standout ideas, tweets and comments: a tl:dr version of sorts for those short on time. We have all the videos and all sessions transcribed and packaged for you, and you can catch up with all of our Structure Data 2013 coverage here on GigaOM.

One session you can’t miss: a keynote by Sean Gourley of Quid, who stepped up to say: less science and more intelligence from data. I say, bring it on.

Plus here is what CIA knows about you, even when you think they don’t.

And now for the stories you might have missed:

• When is the Internet accelerator bubble going to pop, asks BusinessWeek. Good question, but we feel it might actually be happening, we just don’t see it as clearly.
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It’s a topic that came up recently during a conversation with SparkFun, the retailer of DIY electronics kits headquartered in Boulder, Colo. While sitting at a table with Nathan Seidle, the CEO of SparkFun and Pete Dokter, the director of engineering, we discussed the impact of Kickstarter on the firm’s business. In general, Kickstarter is great marketing for the DIY movement that SparkFun is dependent on, and it is happy to supply boards for prototypes.

However, once you start talking about huge production runs of an electronic board for the next big widget, or even worse, fulfilling those orders, Seidle is leery.

He pointed to the MaKey MaKey campaign of 2011 as an example. The MaKey MaKey team, which was building a kit for would-be hardware hackers, worked with SparkFun ahead of the campaign to guarantee the production of the needed boards and for fulfillment. If the MaKey MaKey campaign was successful, SparkFun would manufacture and assemble the product and then ship it out.

What happened next was a nightmare for SparkFun, which to this day is still seeing at least two returns a week from the product. The problem wasn’t a bad product, but bad data. As Seidle puts it, Kickstarter doesn’t have checks in place to ensure people don’t enter the wrong address or make other mistakes when ordering a product.

The result was that about 40 percent of the data Kickstarter sent over on behalf of Makey MaKey needed clarification. That led to SparkFun’s customer service people trying to verify addresses — one example: is there a Houston, South Africa? — and it is still leading to returns. Seidle vowed to avoid that side of the business from this point forward.

Luckily a quick check among the people doing current and former Kickstarter projects shows that there are plenty of companies that will offer fulfillment for Kickstarter orders, and most entrepreneurs plan to use them. But it’s yet another sign of the holes we need to fill if we’re going to make the transition from the more traditional large-scale manufacturing process or the traditional funding models for a crowd sourced future.

It’s also a good idea to double and triple check your address when you enter it into Kickstarter.

Update: Kickstarter’s Dave Ghallagher notes that Kickstarter fixed the bad data problem by implementing an address validation system back in 2012, too late for the MaKey MaKey project, but in place for existing projects.

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