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    How Massively Successful Kickstarters Ultimately Fail

    Written by

    Jason Koebler

    Staff Writer

    Image: Zano

    The Zano drone was one of Kickstarter’s most popular crowdfunding campaigns of all time, raising £2.3 million in late 2014. A year later, that money was gone, the drone’s creator was on the verge of a nervous breakdown, and the company’s 13,000 backers were out of luck. What happened?

    Kickstarter hired freelance journalist Mark Harris to conduct an investigation into the drone’s parent company, Torquing. Harris spent five weeks interviewing Torquing employees, going through the company’s financial documents, and even checking out the company’s headquarters in Wales. He published his 13,000 word investigation last week. Kickstarter wrote in a note to backers that “Kickstarter did not serve as an editor, or make any changes to the report.”

    This week, Radio Motherboard talks to Harris about his investigation. We also track down former Torquing CEO Ivan Reedman, who says he was on the verge of a nervous breakdown when he ultimately resigned from the company. Reedman says he has lots of regrets, but said that many of his company’s problems arose from the crowdfunding model itself: Backers expected to receive a drone on a short timeline, and the company rushed to meet it, even though the product wasn’t even remotely ready to perform as advertised. Torquing had to hire a fleet of customer service representatives to deal with angry backers, and also started producing the Torquing before it was ready, sucking the company of all its money.

    The question that remains, then, is should Kickstarter be held responsible for any of this? The company does little vetting to investigate whether a company is actually capable of shipping the product it’s developing, which critics say is negligent and ultimately misleading to customers who treat Kickstarter like a shop. Others, like Ethan Mollick of the University of Pennsylvania’s Wharton School of Business, say that the overall failure rate of Kickstarters is pretty low, that scam rates are even lower, and that crowdfunding does far more good for innovation than bad. We also speak to Harris's editor, Wirecutter editor-at-large Glenn Fleishman, about the potential perils of doing journalism for hire.

    As always, thank you for listening to Radio Motherboard. If you like this episode, please consider subscribing to us on iTunes or your favorite podcast app. We also love reviews. See you all next week.

    Update: Glenn Fleishman has spoken to Kickstarter and says he overstated Kickstarter's automatic approval process; Kickstarter contacted him with more complete details. Kickstarter says just 40 percent of projects (not 90 percent) are greenlit through automatic review to go live without a Kickstarter staffer checking them out, and Kickstarter manually reviews 100 percent of technology and design category projects.

    Fleishman says over three-quarters of automatically approved projects go live (some request a review from Kickstarter); about two-thirds of manually reviewed projects get accepted by the company to launch.