5 Risks No kickstarter ever lists, but should.

Recently Reddit, and Penny Arcade Report cited a Kickstarter Campaign which was successfully funded, but failed to deliver the product.  Based on comments and  tweets the game had a lot going for it.  Backers say that the game mechanics were done, that playtest had gotten to final stages.  But the game was still not produced.  There are rumors that they were attempting to start a company using funding from the project.  The kickstarter campaign clearly states that it is to produce a board game, not found a company.  Unfortunately a project is not a company, and if I had to guess I would assume that not understanding this point led to their downfall.

On one hand I feel for the backers who lost their money, it sucks to lose money.  On the other hand I work in Financial Services during the day, discussing investment portfolios.  Portfolios in which you can lose money. Portfolios where past performance is no guarantee of future success.  That sentiment is on every document, every statement, and every prospectus.  It is all but stamped on our forehead.  Everyone knows that people lose money based on the outcome of the stock market.  For most investors its expected.  Why don’t backers of kickstarters feel the same way?  They should.

And maybe kickstarter should have a boiler plate statement as well.  Maybe, if people starting projects were really honest with themselves and the community, they would include the real risks.  At the moment most projects enter very little to no information in the ‘Risks’ section of their project.  It was very good of Kickstarter to include that section.  But it is very bad that no one fills it out honestly. At best this is the mark of a passionate team, who believe in themselves to the point of being overconfident.  At worst the risks section is an outright lie.  So here are the 5 Risks EVERY kickstarter should include if they were really honest.

Risk 1
We could be incompetent, amateurs, overly specialize professionals or overconfident professionals.  Due to our inexperience we could use all the money on doing something completely outside the scope of what we have stated above.  We might be really good at game design, or graphic design, or building kickstarter pages, but we might suck at running projects.  We could underestimate the cost of any of a dozen things including (but not limited to) concept art, back end systems, cardboard could make card stock too expensive to purchase.  We might be a risk.

Risk 2
We have to work with other companies, contractors, payment systems, support systems, dropbox, Google.  Our ability to complete this project relies in some part on our ability to work successfully with our partners.  We could be jerks, fight with our partners and lose all your money in the process.  There could be a systems crash, or network disruption.  There could be fire, theft, or earthquakes which destroys all our work, and wastes all your money.  Our partners might be a risk.

Risk 3
We could have greatly underestimated the scope of the project or the number of people it will take to complete the project.  Or ‘committed team members’ could leave, making our estimates of scope wrong.  This could lead to us using up all the money before anything gets produced.  Or we may have overestimated our ability to deliver swag.  We could end up spending everything on t-shirts and lose all your money.  The project itself might be a risk.

Risk 4
We have to continually report to [X] stakeholders.  Where [X] is the number of backers.  Plus media.  Plus new people that didn’t get in on the kickstarter, but want the thing we’re making.  That pressure of having to report and manage the relationship with our stakeholders could be overwhelming.  We could get distracted by ‘community management’, and lose all your money hiring PR firms, or starting forum boards or twiddling our thumbs on twitter.  Having your on board might be a risk.

Risk 5
We could do all of these things correctly.  We could manage ourselves, manage our partners, manage our resources and communication, and simply just fail.  We could toil for years try our hardest, do our best, and still you could lose all your money through no fault of our own.  An uncertain future is definitely a risk.

If a project was really honest with you, it would list all these things in the Risks section of kickstarter…  But if we, as backers were really honest with ourselves, we would realize already that it’s incredibly hard to complete a project, start a company, or get anything done in this world.  That doesn’t mean that we can’t hope, dream and support people who we think can really make it.  So go back those campaigns, but realize that you could lose all your money.  And check out this article about the successful kickstarter for Shadowrun: Returns for a team that has shit together.

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