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The Kickstarter Principle: Crowdfunding doesn’t work without transparency and trust

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Every now and then, there’s a truly heart-warming story about crowdfunding, like the case of the school-bus monitor who was tormented by kids on her bus and wound up with a windfall of $700,000. This week there was another story that seemed just as inspirational, when a mother set up a campaign so her 9-year-old daughter could go to computer camp and design a video game to prove to her brothers that she was smart — a plea that has so far raised more than $20,000. After some evidence appeared that showed the woman to be wealthy, however, the attitude toward her project quickly changed.

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.

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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.”

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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

6 Responses to “The Kickstarter Principle: Crowdfunding doesn’t work without transparency and trust”

  1. KS is no longer a platform for funding art works, but a platform where graphic novels and gaming take the lion’s share of the funding dollars.

    True, there are other crowd sourcing sites that deal specifically with art works, but it’s interesting to see that the average backer “trusts” a gamer to slap together yet another shoot-em-up caper more than they would trust a writer to finish a play or a sculptor to buy materials for a new work.

  2. If I were to be honest, I think the little kid’s mother cheated on everyone. If her goal was to let her kid raise her own money, then she should have told this in the first place. She didn’t say that she couldn’t afford the money, but she didn’t say that she could either. What I mean is, the way she first posted on Kickstarter gave a general idea that her family is unable to pay for the kid’s university/school. And that was the appealing part for everyone that paid.

  3. Here’s what she can do. Give the money to the camp, and start a scholarship program there. Spend the money on other girls to do the same thing.

  4. Matt Eagar

    I think we have seen something similar play out with the free and open source software movement, as well. Developers contribute their time to projects, and they are happy to do so — until someone tries to lock down that work and profit from it unduly. While there are companies that have navigated this area well, you have to be careful that you don’t make supporters feel that you are becoming rich on the backs of their good will.

    • That’s a great comparison, Matt — it’s exactly the same dynamic as the open-source movement. People are happy to contribute their time when everyone believes they are contributing to a common goal, but when they feel someone is taking advantage of them the atmosphere changes. Thanks for the comment.

    • dotpeople

      As more inadvertent trolls and penetration testers of warm-fuzzy-as-a-service emerge, the communities will benefit from verbalizing their assumptions of each service’s social contract.

      The open-source community (e.g. ESR, O’Reilly) went to some lengths to define their cultural boundaries. This has not yet been done for services which exist outside the boundaries of philantrophy and blue-sky investment. Their social contracts and culture may be altered if Congress passes crowdfunding legislation.