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The big problem with crowdfunded tech products

AndroidPIT in love with tech2
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Back in the day if you had a cool invention or an idea for a tech product, you'd build a prototype and try to attract investment for a final product. Once the vision was realized, you'd sell it to consumers. Today, thanks to popular crowdfunding platforms, tech startups and even established companies can sell their products before they've even developed them.

I've wanted to write a piece about crowdfunding for a while now, and every time I go to start it my opinion on the issue changes. Platforms like Kickstarter and Indiegogo can be powerful for bringing things to life that would never have existed before - I have purchased one thing from Indiegogo. It was a book, a memoir written by an artist I was interested in. About a year later I received the book, and was happy with my crowdfunding experience. I was promised a memoir of unspecified length and that's what I got - but it doesn't always work out.

That book is the kind of thing that crowdfunding is good for. Sure, the author could have gone to a publisher and asked for an advance, but my guess is that if he could have, he would have. That book would never have been written had a crowdfunding platform not been around to allow the audience to pay for the product upfront before it even existed. Because that's what we are doing here when we spend money on Kickstarter and Indiegogo - buying a promise, an idea, with no guarantee that it will ever come to fruition - and that's a big problem when it comes to tech.

Good faith effort and broken promises

Crowdfunded campaigns come in all shapes and sizes, but in the tech world, we're often presented with flashy videos and bold claims about future innovations. This is just part of the process. Startups and inventors want to attract as much investment as possible, so they need to sell you the grand vision. The problem for consumers is that most platforms only require these companies to make a good faith effort to deliver what they say they can deliver. When you hand over your money, you essentially make a leap of faith. Whether the project is eventually watered down or fails to see the light of day is irrelevant, as long as someone tried, in good faith, to deliver what they promised.

Kickstarter and Indiegogo are awash with failed tech products. Who remembers the iBackPack? It raised more than $720,000 in 2015 promising to be an urban backpack that could charge your iPhone and becoming an internet hotspot. Four years later, it has never been released and the team behind it has vanished. I could tell a thousand stories just like this one. There are success stories, too. Oculus VR was originally funded through Kickstarter before being bought by Facebook in March 2014 for $2.3 billion.

AndroidPIT oculus quest headset controller
Oculus VR started on Kickstarter before being bought by Facebook / © NextPit

Even if the product you have backed does eventually get released, you have no idea when you'll receive it. Delays are common in tech development, but even more so in the crowdfunding space. These campaigns run for years, and with no control over how much money is coming in (or not coming in) development is never a smooth journey from A to B. Missing funding goals could lead to a lack of money to make the product, whilst being unexpectedly successful means a surplus of cash but startups are often stumped by how to scale for large numbers of orders and struggle with meeting production demands.

The truth is, there is risk involved for anyone backing a product on Kickstarter or Indiegogo. There is always risk when developing new technology, the difference is that today that risk is being undertaken by the consumer, not the company that is going to make the profit if things go well. That doesn't sit well with me, especially when you see established brands using crowdfunding to negate risk.

The Light Phone 2 as a case study

One interesting case study we can look at here is the Light Phone, and subsequent Light Phone 2. The E-ink smartphone has been designed to help people use their phones less. It's a stripped-back, minimalist device for those who want to escape the grip of smartphone addiction. First released in 2017, the original Light Phone achieved moderate success. Founders Joe Hollier and Kai Tang had doubled their crowdfunding goal of $200,000, and eventually shipped 15,000 Light Phones.

The problem with building a smartphone that is meant to be used as little as possible was that people ended up not using it at all. It didn't even have text functionality, and it cost $150. The Light Phone, it turned out, was too light. And so, in January 2018, Light Phone 2 was born.

The idea was to make the Light Phone 2 a bit heavier than the first version, but still much lighter than a smartphone. There would be the ability to save numbers (something you couldn't do on the original Light Phone), a proximity sensor would be added, a headphone jack and physical buttons. There would also be a music player and Maps app for navigation. There was even talk of simple versions of ride-sharing apps. On Indiegogo, it raised more than $3.5 million.

The Light Phone 2 was delayed in January 2019, and by July it still wasn't ready. It is still only available for pre-order, with shipping scheduled to start on March 15, 2020. When it launches, you will be to make phone calls, send messages, and there is an alarm - that's it! Oh, and it costs $350.

light phone
You can send text messages on the Light Phone 2 / © Light

“Crowdfunding makes you pitch the dream,” Hollier told The Verge earlier this year. “And then when you start building it, you’re basically going backwards a bunch of steps to make it real.”

And that's the big problem I have with this business model. Those who backed the Light Phone 2 have waited more than a year, and even when they do get their $350 dollar phones, they will be waiting further for the features and apps that were pitched in January 2018. If they don't ever come, tough luck.

As consumers, it does not make sense for us to be taking this level of risk to bring products to market. Call me old fashioned, but this is the opposite of the way things are supposed to work. Big business takes the risk, and if it is successful it reaps the rewards as we flock to buy the finished products. Paying for promises is a mug's game in the tech industry.

"Crowdfunding makes you pitch the dream"

Crowdfunding platforms can be positive for small passion projections and for fan communities to provide the funds to help artists and inventors create things that otherwise would not exist, but I'm tired of seeing these well-funded startups using Kickstarter and Indiegogo to sell us magic beans.

Have you ever backed a product on a crowdfunding platform? Tell us about your experience in the comments section below.

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David McCourt

David McCourt

David enjoys staying abreast of the latest technology and newest Android apps. Outside of the office, he can be found playing snooker and writing bad 00s indie songs.

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  • 1
    one post 1 Dec 20, 2019 Link to comment

    While delayed from an April launch, The light phone 2 has been shipping since September 2019! Secondly, the pre-order is for those who never backed the project for which there is absolutely no commitment required from the company to even offer it at all after the kickstarter! I am a backer and my phone has been delayed but that is a potential caveat of using this type of business model and it should be assumed that a delay is always a possibility for a low volume, new product - especially for tech or products requiring specific re-tooling and custom parts from 3rd parties at manufacture! Please research your facts before passing them off as true!

  • 49
    storm Dec 3, 2019 Link to comment

    There is no follow on support either

  • marco sarli 39
    marco sarli
    • Admin
    Nov 28, 2019 Link to comment

    Another business model with nobody taking responsibility . Just another get-rich-fast-without-working scam, in the end

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