Crowdfunding Platforms Need to Be Better Watchdogs, Says Journalist Who Investigated Kickstarter's Biggest European Failure
The Zano mini drone campaign on Kickstarter was a disaster. After raising nearly $3.5 million by promising to ship thousands of backers reward drones, the project managed to ship just four.
Kickstarter’s response to the high-profile failure was unexpected: the company hired freelance journalist Mark Harris to find out why the project crashed and burned.
The results -- in the form of Harris’s 13,000-word post-mortem posted on Medium -- are in.
“Personally, I do not believe that the creators possessed the technical or commercial competencies necessary to deliver the Zano as specified in the original campaign,” Harris wrote. In his assessment, the crowdfunders in question aren’t scammers. They’re inept.
In other words, the Zano campaign’s failure boils down to inexperience and incompetence, a corrosive combination that has torpedoed crowdfunding campaigns time and time again -- and burned countless consumers in the process.
Toward the close of his exhaustive report, Harris suggests crowdfunding platforms do a better job of positioning themselves as fundraisers instead of “retail websites.” Perhaps this will stop first-time backers from confusing them for online stores, like Amazon.
Harris put forth several other recommendations for crowdfunding platforms on how to make crowdfunding a less sketchy endeavor. Here are four of them:
1. Identify and kill off weak or unrealistic projects before they reach their campaign goal.
Harris suggests replacing the “Report This Project” button buried at the bottom of every Kickstarter page with a “Convince Me” button. If enough people express skepticism about a project by clicking on such a button, it could be flagged by the platform’s Trust and Integrity team members before it reaches its funding goal.
2. Help campaign creators after they meet their goal.
When it comes to crowdfunding, raising donations is often the easiest part. It’s typically much harder to deliver promised perks and products. Just ask Reading Rainbow’s LeVar Burton.
To give creators a leg up after they’ve reached their funding goal, Harris recommends that crowdfunding platforms pair them with a mentor who has successfully fulfilled rewards for a similar project. Harris envisions the mentors working on a volunteer basis, at least at first. (Although we have to wonder: In the absence of a financial carrot, how motivated would these men and women be to actually help?)
Related: 4 Famous Crowdfunding Fails
3. Be more vigilant about “massively overfunded” projects.
When a campaign exceeds its goal by a large amount, Harris suggests crowdfunding companies step off the sidelines to help creators manage the funding process. This could mean onboarding various “external experts” to consult on wildly successful campaigns, as well as automatically extending reward ship dates as orders add up.
Harris argues that crowdfunding platforms need to acknowledge how hard it is to manufacture a product while juggling communications with thousands of backers.
4. Crack down on misleading videos that make products look better than they are.
Harris alleges the promo video posted on Zano’s Kickstarter page, which shows the nano drone shadowing a mountain biker and flying over selfie-snapping revelers, might have been enhanced by CGI and other filming tricks.
To stop campaign creators from wowing backers with sneaky, digitally- and otherwise enhanced videos, Harris suggests crowdfunding platforms create and enforce video review rules. Stricter video requirements could uncover CGI use and help unmask false product claims, ideally before consumers are duped into handing over their hard-earned money.
Kim Lachance Shandrow is the former West Coast editor at Entrepreneur.com. Previously, she was a commerce columnist at Los Angeles CityBeat, a news producer at MSNBC and KNBC in Los Angeles and a frequent contributor to the Los Angeles Times. She has also written for Government Technology magazine, LA Yoga magazine, the Lowell Sun newspaper, HealthCentral.com, PsychCentral.com and the former U.S. Surgeon General, Dr. C. Everett Coop. Follow her on Twitter at @Lashandrow. You can also follow her on Facebook here.