Can Kickstarter's new CEO help the company get its mojo back?

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BY David H. Freedman

One of the tech darlings to come out of the Great Recession of the late 2000s, Kickstarter popularized crowdfunding. Since its founding in 2009, its platform has helped to raise $5 billion, launching more than 220,000 projects, including businesses like Oculus, Allbirds, and Peloton. The number of funded projects on the site is reaching new heights, and this year 54% of all projects have hit their funding goals, steadily up from less than 43% in 2018. But the past couple of years haven't been entirely smooth sailing for the company. And now, a new CEO is hoping to get it back on course.

It started late in 2019 when word got out that the company seemed embroiled in an acrimonious employee effort to unionize, leading to rumors of broader staff discontent and threats of boycotts. Then in 2020, after the pandemic caused a reported 35% plunge in new projects listed on the site, Kickstarter cut an estimated 40% of its staff through layoffs and buyouts. Last October, the company shuttered its stylish Brooklyn headquarters in favor of all-remote work. Then, in December, the company announced it would rebuild itself in some mysterious way around blockchain and crypto, leading to an uproar from the community and derision of Kickstarter as a company clumsily groping for traction. In March, CEO Aziz Hasan announced that he was leaving, with no permanent replacement in sight.

This week, as Fast Company reported, Kickstarter finally announced that replacement: Everette Taylor, the former chief marketing officer for online art site Artsy. Taylor’s first order of business will be to redirect the buzz around Kickstarter and dispel the notion that the company is flailing, with its best days behind it. “Kickstarter was this great opportunity to bring those executive skills that I've had at larger brands on the marketing and product side, which I feel are two of the areas that Kickstarter can really improve on,” he tells Fast Company. “It's really bringing more fire to the brand and getting Kickstarter back into the conversation. Kickstarter had its best year ever last year, a lot of people don't even realize that.”

In some ways, Taylor will have plenty of positives to work with. Employees did, in fact, unionize, and by most accounts the process went fairly smoothly and amicably after a few early hiccups. Its workforce seems happy to work remotely, and most are even enjoying four-day workweeks. The blockchain controversy is fading, with little sign that much will come of it any time soon, if ever, to the relief of most parties. No whiff of scandal has wafted out around Hasan’s sudden departure, which appears to have been for personal reasons. And, of course, there are those numbers shouting continued growth.

That just leaves Taylor with one big question to answer: Is there any reason to be excited about Kickstarter anymore?

Kickstarter was once the harbinger of an economic revolution that was supposed to do to startup fundraising what blogs and social media did to the publishing world. The crowds and their wisdom would become the new arbiters of and investors in innovative products and creative projects, and tens of millions of us would fulfill our potential as the entrepreneurs and artists behind those ventures.

But now Kickstarter is one of dozens of platforms helping to direct generally modest amounts of money to projects—the average raised on Kickstarter is around $5,000—and none of it feels especially revolutionary. “Crowdfunding has mostly been a trail of disappointment,” says Jason Freedman, a general partner at venture capital firm Peak State Ventures and a founder of several successful companies. “Instead of being a disruptive shift in how things get funded, Kickstarter is mostly a mechanism for aggregating a bunch of small checks.” By Kickstarter’s own reckoning, most of those checks come from family and friends, and others who aren’t likely to invest in more than one project. While 220,000 projects is a lot of new gadgets and games, it’s barely a blip in the economy, mattering not a whit to how the great majority of the masses invests its money or supports itself.

That’s not necessarily an indictment of Kickstarter. The company has never really pushed the narrative that it was going to turn us all into small-investor-backed creators. “The creator economy has become a hot topic, and there’s been a lot of hype around it,” says Sean Leow, the company’s COO, who, for the past six months, was the interim CEO. “But Kickstarter hasn’t pushed for fast growth. We want to be more of an ongoing utility providing a valuable service to creators.” Leow is quick to add that Kickstarter is a Public Benefit Corporation, chartered to fulfill a worthwhile mission over maximizing profit.

Still, former CEO Hasan, currently busy helping build his wife’s fast-growing fashion business, admits that he and the management team felt haunted by the sense that there was some as-yet-undiscovered leap that Kickstarter needed to make. “I think there’s a natural identity crisis that a company hits around the 12-year mark,” he says. “You want that next big vision.”

New CEO Taylor may well feel the pressure to channel the vision that apparently eluded Hasan, as well as main founder and two-time CEO Perry Chen, who left the job for the second time in 2019 and remains chairman of the board. (Chen stopped responding to requests for an interview.) But if Taylor does come up with a new big thing, he’ll have to square it with the tens of thousands of creators and entrepreneurs who seem to like Kickstarter just the way it is. “People who rely on Kickstarter find it scary that we would want to change in any way that might threaten their livelihood,” says Leow.

Tarot and tabletops

In a Kickstarter campaign starting in March, fantasy writer Brandon Sanderson pulled in more than $41 million from 185,000 backers to fund publication of his four latest novels. 

Most campaigns go quite a bit differently than that one, which was the best-funded ever on the site. Nor do they go much like the several Kickstarter campaigns run by Chinese home-electronics manufacturer Anker, which routinely raises millions for its “Eufy”-branded prelaunch smart-home products.

There are plenty of books and gadgets vying for backers on Kickstarters, few of which bring the name recognition and marketing muscle of Sanderson or Anker. A more typical book campaign success is that of Murderbirds!, a collection of short stories about killer avians, which, as of this writing, is more than halfway through its 30-day campaign, having already raised around $4,000, more than twice the funding goal. Mechanical keyboards are one of the most popular and fastest-growing gadget categories, with about 25,000 projects per year raising around $4 million—an average of $160 each.

There’s a big range of products and projects looking for funding on Kickstarter, all under the site’s “all or nothing” formula: If you don’t hit or exceed your stated funding goal, you get nothing, and all pledged money is returned to backers. The policy is meant to incentivize creators to set realistic goals, and to work hard to reach them.

But what has really been thriving on the site in recent years are various creative-content and art niches, including puzzles, embroidery, and literary journals, each of which has more than doubled the aggregate funds raised over the past four years. Comics have the highest project funding rate on the site, at 64%. 3D-printed knickknacks are big, too, as are magic-and-divination projects; tarot-card-themed items have pulled in $15 million for creators in the past two years. Loose-leaf tea subscriptions have done well, too, according to Leow. 

But if there’s talk of revolution at Kickstarter, it’s around tabletop role-playing games (TTRPGs), where players move tiny game pieces around a board or playing area, à la Dungeons & Dragons. “That’s where we’ve had a huge impact,” says Kickstarter chief strategy officer Jon Leland. “It wasn’t a revolution that happened by design, it just emerged.” Kickstarter and TTRPGs are now inseparable. As one influential gaming site put it in a blog post: “The TTRPG hobby has let Kickstarter become infrastructure.” 

While Kickstarter is always looking to bring in more creators seeking funding, backers willing to give them money are the more limited resource—especially backers who come to Kickstarter to find projects to back, as opposed to the friends-and-family backers that creators bring with them, and who rarely back other projects. Connecting creators with the latter is just a matter of convenience; bringing in the former is where the real value would lie.

By tracking the ways that backers come to project pages, the company estimates that 31% of backers are the more promising sort, up from 11% in 2018, a good sign. Still, there’s little indication that Kickstarter has even begun to ignite any sort of mass movement toward turning ordinary people into potential funders, insists Barry Bayus, a marketing professor at the University of North Carolina’s business school who studies crowdfunding. “There are still relatively few people involved in it,” he says. “And those people who do put projects up on the site usually only put up one, and most people who fund them only fund one. When you consider that only half of projects succeed, and those that do only bring in a few thousand dollars, it’s hard to see it as a big shift to crowdfunding.” 

Another big challenge: Even some of the successful campaigns can run into trouble. 

Delivery dilemma

In 2020, New York video director and photographer Steve Giralt launched a Kickstarter campaign to fund a set of video training resources along with related hardware and software tools, called The Garage Learning. As his Kickstarter page put it: “Learn creative problem-solving while shooting amazing commercial videos with our online courses and inspiring learning toolkits.” He raised more than $410,000, exceeding his goal of $399,000. But Giralt ran through the money trying to get the venture off the ground, and threw in the towel in August, leaving his 586 backers with little to show for their money.

Of course, starting a business is hard, and even most high-end VC-funded businesses flop, leaving investors empty-handed. In theory, investors understand the risks. At least the VCs do. Kickstarter backers, maybe not so much. A typical comment from The Garage Learning’s Kickstarter page: “Lost $4k because I backed this project fully. Never backing a Kickstarter project ever again.”

Experts and insiders agree: If Kickstarter wants to level up, job one is to figure out a way of helping backers determine which creators are likely to deliver on their promises. “Running a successful Kickstarter campaign has very little to do with producing a product,” says Jamie Roth, a former product manager at Kickstarter who left in 2020 to found a company that helps small-business owners sell their businesses. “Most don’t know what they’re getting into.”

Kickstarter claims about 9% of its funded projects don’t deliver. But the situation is likely much worse than that because that number only counts those projects that didn’t deliver in a definitive way that came to the attention of Kickstarter. Far more projects end up delayed or in furtive limbo. “It’s very difficult to measure what happens to these projects after they get their funding,” says Mingfeng Lin, an associate professor at Georgia Tech who studies financial technologies. “For a platform like Kickstarter, raising the money is the end of their involvement. They don’t have a way to make sure the backers don’t get the short end of the bargain, or do anything to help the business thrive.” The site instead relies mostly on community comments—which, given the fact that most creators and backers are first-timers and more or less amateurs, doesn’t provide much security.

In some small minority of cases there is take-the-money-and-run outright fraud. But more often the problem is an abundance of creativity and marketing skill, and a shortage of product development know-how. “It’s too easy to raise money on the platform with a video that shows amazing drones,” says Peak State Venture’s Freedman. “And it’s too hard to actually build an amazing drone.” That’s why The Coolest Cooler campaign for a cooler that could crush ice and blend drinks raised more than $13 million and returned nothing to its funders, and the Amabrush campaign for a dental gadget that brushed all your teeth in 10 seconds raised $3.4 million but left funders in the lurch. Even the University of North Carolina’s Bayus was burned by a campaign, which promised software that would teach him Chinese through a Siri-like interaction, but gave him nothing to show for his $200 investment.

That sort of ambition-to-know-how mismatch is caught during the grueling process of trying to raise money through the conventional venture community, notes Freedman, but sails right through the relatively frictionless campaign-launching process on Kickstarter. Crowdfunding won’t take off in a big way until that problem is fixed, he adds.

Georgia Tech’s Lin believes Kickstarter could go a long way toward solving the problem by tying its own fees—currently a flat 5% of everything raised—to ultimate delivery of the product. That would incentivize the company to do better screening of potential campaigns, and to stay on top of projects’ post-campaign progress toward delivery. The results would help reassure backers and likely increase the pool of funding. But Lin is skeptical that Kickstarter would go that far. “It’s probably too burdensome,” he says. “Platforms want to automate the process as much as possible.”

Andrew Blancato, Kickstarter’s former vice president of people, who left the company in 2019 to start an executive search and hiring-strategy firm, confirms that the company has long wrestled with the problem of failure to deliver. “We were always looking at ways to redesign our tools to create more integrity and trust in the system,” he says. “But it is and will forever be a work in progress.”

Crypto crash

It was the ongoing quest to create more trust in the platform, combined with the itch to think in visionary terms, that led Hasan and his team to the debacular blockchain announcement. It essentially promised a new, more decentralized Kickstarter that would distribute the company’s decision-making and product development to the communities it served. 

The announcement painted a blurry picture of some blockchain-based way of running and growing the platform that would remove much of management’s control and ownership. It also named the Celo blockchain and cryptocurrency its mechanism of choice, suggesting to some that platform users and outside developers might need to buy and trade Celo crypto tokens in order to gain decision-making votes, tie into the platform, and share in profits. Kickstarter, in other words, seemed to be saying it was going to become some sort of DAO, or decentralized autonomous organization. 

The reaction was swift and furious. DAOs have been growing in popularity as a way to raise money for new crypto ventures and other projects, including one that raised $40 million in a failed attempt to buy a copy of the Constitution. But for niche-creator industries like the TTRPG world, which has tied its fortunes to Kickstarter, the notion that the company was going to morph into some sort of scattered, free-for-all entity built around fly-by-night crypto coins was not reassuring. Far from engendering trust, the scheme fractured what trust there was.

The company has been furiously backpedaling ever since. “We’re not blockchain or bust,” says Leow. “We want to add tools that have value, not hype and scam. We’re exploring ways to do that.” The backlash, he says, was all a big miscommunication.

Taylor echoes that “never mind” sentiment. “I think there was a misunderstanding with that,” he says. “People thought Kickstarter is about to become a Web3 company, and that's just not the case. I think it would be a disservice for Kickstarter to not explore other opportunities out there, but our focus is helping creators and backers be as successful as possible on the platform.”

While the issue of shared governance seems to be firmly on the back burner for now, the notion of opening up the platform to outside developers is one that may make a lot of sense for Kickstarter, whether or not it has anything to do with blockchain and crypto. “We want to figure out how the platform can be more open source, to aggregate the power of large groups,” says Leow.

What that seems to mean is that Kickstarter wants outsiders to improve its platform, much the way Wordpress is open to plug-ins. One could imagine Kickstarter plug-ins that make it easier to set up campaigns, search out new potential backers, and even assist with product development and delivery. For backers, plug-ins might help vet potential investments and then stay on top of progress toward delivery.

There’s a simple reason Kickstarter doesn’t just go ahead and build these kinds of tools itself: It has 83 employees, and fewer than 20 of them are software engineers. “People think it’s a giant company, but it's a small team trying to operate a site with a lot of traffic,” says Roth. “There’s a big resource mismatch. Every category of product is its own world with its own community and needs, and there’s a lot of complexity in trying to help even one of them without causing problems for another one. It’s like trying to boil the ocean.” The team has its hands full just trying to keep the site running smoothly, thanks to what she says is 10 years’ worth of tech debt—that is, hastily developed code that has to be debugged and reworked for efficiency.

Leow doesn’t disagree. “We’re very constrained,” he says. “We can picture new services that others could add, like calculating shipping, and reaching backers in Japan, and giving new types of feedback, and helping something get made in China.” That’s where blockchain can come in, he adds—essentially by making it easier to fit these sorts of new tools into the platform, and to automatically funnel compensation to outside developers, based on the utility and popularity of their contributions.

As for the blockchain-based governance piece, Leow recalls what happened to outside developers at Facebook when he was a manager there in 2014. Facebook had invited developers to build a vast array of tools to pump up engagement, encouraging them to build entire businesses around their offerings. Then the company suddenly pulled the plug on them, bringing all the development in-house. “Developers don’t trust centralized platforms anymore,” he says. “Blockchain can be one way we can give them rights, so they can feel safe the rules of the game won’t change.”

So far the company only has plans to hire “a couple of people” to focus on blockchain, says Leow. Leland, too, downplays the blockchain commitment. “The skepticism and even anger is justified by what everyone has seen in that space so far,” he says. “But it would be irresponsible of us to not take a close look at the technology.” Eventually, he adds, crypto might open up more efficient and scalable ways of transferring funds from backers to creators. Though right now, no one seems in a hurry to get paid in crypto.

Attack of the niches

Time is not necessarily on Kickstarter’s side when it comes to figuring out how to recharge the business. Almost daily, new niche crowdfunding platforms are springing up to try to bite off pieces of Kickstarter’s market—or beat the company to new crowdfunding markets it hasn’t entered yet, such as real estate. 

Game On Tabletop and Gamefound are taking on Kickstarter on its core market of TTRPGs, for example. Crowdfunder is looking to pick off Shopify stores, GoFundMe has become the go-to site for online nonprofit fundraising. SeedInvest aims at earliest-stage startups, iFundWomen pitches to women crowdfundees, InVestor is for celebrity fundraisers, BioVerge looks for healthcare-oriented projects, Seed&Spark woos filmmakers, and on and on. And then, of course, there’s Indiegogo, firmly in second place to Kickstarter for all-purpose crowdfunding, but happy to jump to the front if it sees its chance. Meanwhile, as the competition grows, so do the stakes, says Freedman. “When someone finally gets crowdfunding right, the forces of change will be huge,” he says.

So far, Kickstarter has remained in front by virtue of the good old-fashioned network effect. “We’re the large incumbent with the large backer network,” says Leow. “At the end of the day, creators want funding, and we can deliver orders of magnitude more than the others.” But the network effect works until it doesn’t, which is when the leader stumbles or stagnates, and challengers shoot forward with more compelling, leading-edge offerings.

Taylor recognizes he is facing a turnaround situation, and cites Steve Jobs’ recapturing of Apple’s once-lost mojo as the role model for what he wants to do at the company. “It’s about making Kickstarter sexy again by bringing energy and excitement to the brand,” he says.

—Additional reporting by Jessica Bursztynsky

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