While most of the tech industry was trying to fathom why Facebook (s fb) would pay $2 billion for virtual-reality headset maker Oculus VR after the acquisition was announced, many of the 10,000 would-be users who backed the company on Kickstarter were busy slamming the company for selling out — despite the fact that Oculus had already sold out by raising venture capital, as founder Palmer Luckey noted in a comment to the Wall Street Journal.
More than anything, what this furor highlighted is the emotional connection that many backers seem to feel when they fund a Kickstarter project: something that has very little to do with any legal rights they may have to the thing they back, but a connection that is still extremely powerful. In some ways, it may be the most powerful feature that Kickstarter or any other crowdfunding platform has.
As more than one observer pointed out in the wake of the announcement, Kickstarter backers don’t actually get any right to share in the idea or business venture they are helping to fund. In other words, they don’t get any equity rights, the way a venture capitalist would if they put up money to start a company. Kickstarter is quite clear about telling users that they get access to the specific rewards that a project offers on its Kickstarter page, and nothing else — and even those shouldn’t be counted on because they aren’t guaranteed.
I'm sorry, but why is it that Kickstarter backers believe they're owed anything beyond what they were promised?
— Dan Primack (@danprimack) March 26, 2014
Suckers, or loyal fans?
Mike Masnick of Techdirt said the Oculus uproar reminded him of when The Huffington Post (or YouTube) was sold and some users demanded their share of the acquisition price because they helped build the business. In a post at Bloomberg View, financial analyst Barry Ritholtz suggested that the Oculus backers were suckers for putting up money in return for T-shirts and/or developer versions of the device. “Talking people out of $2.4 million dollars in exchange for zero percent equity is a perfectly legal scam,” he said.
Some of those who commented on the deal — in a Reddit forum devoted to the Oculus Rift, where founder Palmer Luckey spent a surprising amount of time responding to criticism, as well as in other places — were happy for the company and seemed glad to have played a small part in its success, even if they didn’t get to share in the cash. But others seemed to feel like they had been used by the company as a stepping stone to riches. As one told Time magazine:
“I felt a little used, I guess. Maybe I was naïve. I thought it was more just like someone doing it for a hobby and just wanted to do something fun for the community. I didn’t know it was going to turn into a $2 billion deal.”
On Twitter, someone said the reaction to the Oculus acquisition was a little like what happens when an indie band sells out and either gets a big record contract or has their iconic song appear in a commercial for something mundane. There’s no question that Facebook is distrusted among many of the geeks and nerds who made up the Oculus funding group.
One of those geeks was Joel Johnson, the editor-in-chief at Gawker Media, who wrote about it in a post entitled “Oculus Grift,” admitting that in addition to $300 of his money, he also had “a lot of emotion tied up in Oculus.” Here’s how he described his response to the Facebook news:
“The fact that everyone involved made a rational choice to sell out isn’t what I find frustrating, I don’t think… it’s that I, as a consumer, bought into the narrative that underpins almost every Kickstarter project: that without my contribution, something novel would not exist.”
Without you, magic won’t happen
When it comes right down to it, this is what Kickstarter or any similar platform — and all of the entrepreneurs or artists who use them — are selling: the feeling that without you and your $10 or $50, this magical or amazing thing wouldn’t happen. It’s like donating to a family who has special needs or contributing to life-saving surgery for a child. And the personal connection to the project is a big part of that magic, which is what makes it so interesting when it’s applied to journalism, as it is through platforms like Beacon and Contributoria.
But that personal, emotional connection is also why Kickstarter gets grief when it is used by celebrities like Zach Braff or the person using it for something worthwhile turns out to not be what they seemed — or even when the money is used in ways that backers disagree with, which is part of the reason that musician Amanda Palmer got flak during her crowdsourcing campaign for a new album, after raising more than $1 million in a matter of weeks.
I think that’s why Palmer Luckey spent so much time responding in the sub-Reddit and elsewhere: because he recognized the personal and emotional commitment that his backers made, even if they don’t have any legal right to share in the proceeds of his windfall. And he probably knew that without them, he might never have gotten to that point in the first place.
Post and photo thumbnails courtesy of Thinkstock / Tashtuvango