The Problem With Kickstarter And SoftwareAug 5, 2012
David: Hey Socrates, thanks for taking the time to grab coffee with me. We're really excited about how our new software product is going to make customers' lives a lot better.
Socrates: That sounds great, how far along are you?
David: We've been hard working for the past three months and have a polished beta, but we're not quite ready yet.
Socrates: Sounds like you should start drumming up interest for a launch. What's your customer acquisition strategy?
David: Well, we're going to launch on Kickstarter.
Socrates: Oh? The crowd-funding website?
David: Yeah, we think it'll be a great platform to get some early adopters.
Socrates: But haven't you already raised venture capital? Why do you need the additional Kickstarter funds to continue work?
David: It's not about the money, we obviously don't need any more. But we do need paying customers, and Kickstarter can give us those in spades. It's less competitive than the App Store, and definitely less crowded than the entire web, so it should get a lot of fresh eyeballs on the product. It was impossible not to hear about the success of the OUYA and Double Fine.
Socrates: I see. Kickstarter unquestionably brought those projects to prominence, but are there examples of it working for unknown software-based products? OUYA is a hardware venture and Double Fine had Tim Schafer behind it.
David: Sure, Code School just met their fundraising objectives.
Socrates: But they had a tangible need for their fundraising. Mac Minis are expensive, and they made it very clear through how they would spend the funds to make the product possible. Essentially what you're planning is to take pre-orders.
David: Well, basically. We have some more perks at various levels, but yeah it's pre-ordering. It's a much more visible place for our product to be than a temporal post on Hacker News or a few blogs.
Socrates: But it's also a much more visible place for your product to fizzle. Check Pixate or App.net, which are well below their fundraising goals. They might have proven some tangible demand, but at what cost? By setting a "goal" you are also setting yourself up for possible failure. You may get a solid data-point in proving product-market fit, but it could also hurt your brand or future fundraising ambitions. What happens if you don't meet your goal? You've done months of work, will you just pack it up? Because then you get none of the money and zero paying customers.
David: We're going to pick a less ambitious goal than those projects.
Socrates: Well then what's the point of going on Kickstarter at all? It sounds like you're betting on a triumphant surge that makes you look like the Next Great Kickstarter Success. But in reality, most people just don't get excited by software like they do with a new game console or 3D goggles.
The customers who are excited about your product should find and buy your software regardless of the Kickstarter. The overlap between "people who go on Kickstarter" and "people who need your software" is probably very small, and you'll find more success specifically targeting the latter group.
There are less visible ways to prove your product is something people need. Talk to customers, run AdWords tests, get email signups, you know the drill. You have a working prototype: get it in users' hands. If it turns out you need to go back to the drawing board, then you can do so in private without losing face.
Kickstarter isn't a way out of hard work. If you know your customers, you should know how to directly market your product to them. Maybe you really do need crowd-funding for something, but make it clear what the money is going towards and why this product won't exist without it. Don't shoot yourself in the foot with a failed Kickstarter.