Did you hear about the 32 million dollar crowd-funding project for the Ubuntu Edge on Indiegogo? It fell short of it’s 32 mil goal but managed to raise 12.8 million dollars which ended up being refunded to the backers, since Ubuntu set the campaign with Fixed Funding (Fixed only allows the campaign to keep the money if they each their goal). If Ubuntu had set the campaign to Flexible Funding (Flexible allows the campaign to keep any money raised, regardless of reaching their goal), Indiegogo would have been able to earn $1,152,000 (9% of 12.8 mil). Had Ubuntu met it’s goal, Indie would have earned $2,880,000 (4%). Wowza.
Anyway, the purpose of this post wasn’t to educate on how to make money off of the backs off of the success of other companies *cough* Indiegogo *cough*, instead, I wanted to talk about 1) Why I think this campaign failed, and 2) If the campaign had succeeded, why it probably would have failed anyway.
Both points can be processed from the following email I sent to firstname.lastname@example.org on July 26th, 2013:
As an early backer of the OUYA Kickstarter campaign, I am going to give you a golden nugget of consumer/crowdfunder knowledge. Listen up. Then pass this on to your execs.
I am one of those rabid-gadget-tech-crowdfunding-geeks that will invest $ and time into evangelising a device to friends, family, and social media. I am your ideal target consumer to help fund your indiegogo. However, I am not going to fund it because you have not addressed the most important thing about perks: getting them out to people.
Now I know all about the discussions/debates that have gone on about crowd-funding, and how if you fund something, don’t expect to get anything in the end. Level your expectations. Keep them low so you don’t end up disappointed. This is a ridiculous way to approach crowd-funding. Maybe it’s fine when you drop $5/$10/$20 dollars on some new entrepreneur’s idea, but Ubuntu Edge, OUYA, Pebble, etc are different creatures. You are going to produce highly anticipated hardware and your brand’s reputation is on the line. Ubuntu is a highly regarded and respected brand, and I’m trying to help you out by telling you my experience about OUYA, so that you can try better to avoid what happened to them.
In a nutshell, they forgot to test out how their product, being manufactured in China, needs to make it’s way from production, to shipping, to delivery – around the world. I live in Canada. I am still waiting on my OUYA. OUYA has said it takes 20 days from end-to-end to ship from China to international locations. It’s been 31 days and it’s 40+ days past the date they promised to have OUYAs out to their early backers.
Perks are not pies in the sky. They are a promise to funders. Opening your indiegogo has now created a store front for Ubuntu and people have come in, laid out their money on the counter, and have said “Once you hit your goal, you owe me my perk and you must follow through on what you have promised/advertised”. Any failures on what you promised, and things go sour very quickly. Oh, and you should try to exceed people’s basic expectations. Add something inside the package. Send out very transparent and personable weekly newsletters and don;t send them to just backers, send them to anyone that wants to hear about them. Follow up after the perks have been received and ask the early backers what could be improved. These people are your best testers and sounding boards.
Along with realistic estimates on delivery dates, you are going to need a team of talented customer service people. FAQs are nice and help, but Ubuntu needs to respond to individual complaints and shipping issues. If you early backer doesn’t hear back from someone on a ticket within 48 hours, consider your customer service a failure.
Please don’t end up being the nerds with a dream and forget that what you’re doing requires talent and experience that you do not have. This is not an exercise in pioneering a new frontier. You are making a product, taking people’s money, building up their hope, and delivering it to them. Yes, your device and mission have the potential to break industry standards, but that means zilch if you can’t even deliver on age-old methods of manufacturing, delivery, and support.
I wish you all the best. I mean no ill will. If my tone comes across arrogant/angry/rude/all of the above, try to filter that out and keep an open mind.
Aside from my pessimism on Ubuntu Edge’s potential end-to-end process, I also saw the giant red flag of the overall 32 million goal. Millions of dollars should never be the goal you set out to achieve through crowd-funding.
If you need millions of dollars, then you need proper investor money.
If you set out to raise a couple-hundred thousand dollars, and you raise millions of dollars because you have gained a rabid amount of enthusiasts around your idea, then hell ya, you are awesome!
Crowd-funders are not so naive to see past your ‘indie’ veil and see that to manufacture, ship, support, and make a new mobile phone as a viable new business for your company, you’re going to need much more than 32 million dollars, crowd-funded or not.
We get it Ubuntu, you’re just trying to ship the first generation out to the people and act like you’re doing us a favor, and then bait us into thinking that the only way this awesome piece of tech is going to get out to market is if the Indiegogo campaign succeeds.
Time to act like adults and get into the mobile phone business the proper way.
Looking forward to trying out your subsidized phone in the near future, Ubuntu.