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.
Entrepreneur Editors' Picks
'No One Believed' This Black Founder Was the Owner of a Liquor Brand in 2012. He Launched to Great Acclaim — Then Lost It All. Here's How He Made a Multi-Million-Dollar Comeback.
Inspired by Elon Musk's Twitter Takeover, Here Are 10 Marketing Tactics That Will Help You Make the Most of Big Changes to Your Company
These Brothers Transformed a High School Project Into the Largest Online Soccer Retailer of All Time. Here's What the World Cup Means for Business Now.
'I Just Lost All My Life Savings': Michigan Woman Lost $15,000 in Facebook Marketplace Car Scam
This Founder Was Dismayed by Food Waste in the Restaurant Industry, So She Started a Zero-Waste Grocery Line That Now Caters Events for Nike
Netflix's Secret Club Allows Members to Preview Content Before Anyone Else — But There's a Catch
Franchising Could Be the Secret to Reaping the Rewards of a Down Economy. Here Are 5 Reasons Why.