Three years in, Kickstarter has become two distinct businesses, said co-founder Yancey Strickler. The company was originally conceived as a patronage service to help artists give life to ideas. But it’s now becoming a store front where products are getting pre-ordered and sold, helping entrepreneurs gauge real-world demand for products.
Speaking at the Wired Business Conference Tuesday, Yancey recounted the success of the platform, which has grown to $200 million in contributions, 22,000 successful projects and 2 million backers. Now, 44 percent of projects meet their goal. While the growth is dizzying, the evolution of the platform has also been a challenge, said Strickler.
While 95 percent of the projects are still artistic projects–film is the largest vertical–the design and technology categories now represent 5 percent of all projects and 15 percent of all money raised. Increasingly Kickstarter is known for selling gadgets including the Pebble smartwatch that has raised more than $7 million. Fueling this kind of direct commerce wasn’t the original goal of Strickler and co-founder Perry Chen, but it’s what Kickstarter has become.
“As a business we have a sense of what Kickstarter is, but other people have different ideas of what it is,” Strickler said.
Kickstarter’s evolution is a function of the open nature of the platform, which for its first two years had very little instructions on how creators and investors could use it. We’re starting to see some people try to take advantage of that to push scams. Strickler said even now, Kickstarter is not doing much screening beyond ensuring that creators are starting finite creative projects that pass their rules. He said Kickstarter is proving that it’s really about tapping the community and that anyone can use the service to raise funds if they engage with an audience.
But he said that investors need to be aware of the limitations of using Kickstarter as a retail store. Pledging money down doesn’t necessarily mean that users are guaranteed to get a product.
“My concern is they’re buying something that doesn’t exist yet,” Strickler said. “It’s not like the Pebble guy has a warehouse in Ohio. He has to make these things.”