The Secret To Kickstarter’s Success Isn’t What You Think
I recently had dinner with a group of startup founders who are tackling challenges in various creative industries—digital art, electronic music, cooking, shoe design. At one point, the conversation turned toward the crowdfunding website Kickstarter. The question was asked: How is Kickstarter able to get people to donate money so willingly to strangers online?
Five years ago this month, Kickstarter launched in New York City to very little fanfare. In fact, the biggest headline the company got during its launch week was “Kickstarter Launches Another Social Fundraising Platform” [emphasis mine]. Sixty months and 59,000 successfully funded projects later, the company is now responsible for the successful launch of thousands of new products, inventions, and businesses—with over a billion dollars pledged in total.
(Screenshot from https://www.kickstarter.com/help/stats on April 13, 2014)
While Kickstarter certainly enjoys some network effects (people start projects and then invite their friends to donate), most of the money given to projects comes from complete strangers. Why are so many of us willing to take such chances on strangers’ science projects and crafts?
The multi-faceted success story
“It’s commerce,” one group member pointed out. There is a transactional element to every Kickstarter campaign. Project owners set rewards for various threshholds of money given. The reward is often the product that’s being developed (and therefore the money paid is essentially a pre-order), but just as often a simple thank-you acknowledgement somewhere. Kickstarter requires this, and every Kickstarter copycat platform seems to include this feature.
You’ll notice that Kickstarter doesn’t call its users “donors” or “investors.” The word the company uses is “backers.” When you give money to a project, you’re not receiving a return on an investment—at the most, you’re getting a slightly better deal on a product that will one day come out. But usually, you’re getting a bad deal and a long wait. In fact, many or most projects involve transactions where the backers are not getting their money’s worth—in tangible terms, at least.
“It’s collaborative artistry, a way for people who can’t invent to participate in art or invention,” said another member of the group. Though we may not be getting our money’s worth from the projects we back in terms of goods “purchased,” there’s something fulfilling about being part of the creation process. And that’s a reward in itself. Coincidentally, I think a lot of people who participate in backing projects get subsequently inspired to do creative work themselves. I’m curious if Kickstarter knows the percentage of its projects that come from people who were previously inspired by other Kickstarter projects.
That brings us to the next argument for Kickstarter’s success:
“This isn’t new behavior,” said the venture capitalist at the table. Artistic patronage has been a thing since the Renaissance, and even earlier. The wealthy have often supported the arts out of philanthropy, personal passion, and boredom. So there’s precedent for the Kickstarter backer model. But people aren’t giving money toward crypto USB drives and rock albums and stretchy shoe laces out of philanthropy. Often, we’re not passionate about these things prior to encountering them on Kickstarter. (Though I will admit that I’ve browsed, and then backed, a project or two out of boredom.)
“It’s Kickstarter’s hand-vetting process”, someone else added. The reason Kickstarter projects attract patrons is because the company carefully screens each project, so that sketchy inventors or rubbish projects aren’t put in front of the community. This is certainly a smart business move, and—counter to popular VC wisdom—this human filter hasn’t prevented Kickstarter from scaling.
Those are all true. But they still don’t answer to the real question. Sure, a Kickstarter project might purport to give us value in products and creative fulfillment, and sure, we might be inclined to support art if we have the discretionary funds and if the art is high quality. The real question is, Why would we believe these people who say they’ll build these things? And perhaps more importantly, why would we believe in them?
The answer has to do with something deeply ingrained in our biology. Kickstarter is successful because its creators tell great stories. And stories are how we humans form relationships.
We are physically programmed for stories. Stories are what bind us to our national identities, our families, our friends. We share stories all day long; every time we sit down to dinner with friends and acquaintances, we retell the dramas and tragedies and comedies of the day. And that brings us closer to each other, causes us to trust each other, even.
The Kickstarter founders did not invent crowdfunding. They improved on it. And they did a lot of things right, including all of the above suggested by the entrepreneurs at my dinner. But Kickstarter owes its rapid growth to the fact that it required all project owners—the people asking for money—to submit personal videos telling their stories. Instead of simply asking, inventors and artists and entrepreneurs on Kickstarter had to get in front of a camera and explain who they were and why they were passionate about their projects. They were forced to tell great stories. And that’s what’s caused 5.9 million backers to take a billion leaps of faith on strangers in the last five years.
Brand storytelling is a drum I’ve been beating on quite a bit lately. The more I’ve looked at the ways great businesses use stories, the more I’ve realize those stories’ power. A few months ago, I said that storytelling was going to be the #1 business skill of the next five years. But lately, I’ve been thinking it’s going to be important for a lot longer than that.
What’s the deal with The Content Strategist? At Contently, storytelling is the only marketing we do, and it works wonders. It could for you, too. Learn more.Image by M Rasoulov