There are a number of crowd funding platforms out there today. Personally I’ve been rewarded and burned quite a few times. So I tend to stick to the two largest (Kickstarter and Indiegogo). Frankly I’ve had a higher percentage (backed to delivered) on Kickstarter than on Indiegogo. But in fairness to Indiegogo I do tend to back way out there projects on IG, where as on KS I tend to pick things that I find interesting/already on the market just a new variation.
I find the projects interesting. A few of the descriptions need some work but overall I find most of the projects are impressive. They miss most often on the gap. What is the GAP? The gap is the difference between projection and reality. It isn’t by the way the gap mentioned often (in blaring messages) on the London Subway system. That gap is between the station and the train. IE a small space where if you aren’t careful you can injure yourself a gap. It is also not the clothing “The Gap.”
The Gap and one that isn’t minded often, is the difference between your estimate (guess) and the reality of the world. Manufacturing companies are in the business of making money. So based on that, they evaluate projects and income as important. Where some technology companies make 40% or more profit per items sold, manufacturing is a much tighter margin. They make 8-12% ROSS (return on sales). That slim margin means that they (manufacturing companies) are always looking for volume. If you make 12% on 100,000 in the time period you could have made 9% of 12,000,000 its not good business to choose the smaller project. The math doesn’t fit.
That’s where crowd funding projects go array. First in that they are producing something that hasn’t been produced before. So the companies that partner have to retool. Then as you retool you have to consider the TAM (Total Addressable Market). Honestly of the more the more than 200 projects I’ve backed I cannot think of a single one that was able to address the GAP. Now that said there are a couple in process that have their own manufacturing so they may turn that corner quickly. For the most part the campaign is using OOM, or outside the organization manufacturing, and that’s why their timelines slip.
Not, that the campaigns are doing anything wrong. They are leaping to that other side and don’t know what is there. Some of the coolest tech campaigns I have backed are creating something that has never existed before. So that gap can change, after you leap. The funny thing is, the people with the expertise that campaigns really need to consult, are out there, they just aren’t in the crowd funding space.
People that understand the what and how of manufacturing exist. They are just not in that crowd funding space. They exist in the manufacturing space. They expose the concept of ethical manufacturing and doing the right things. They are the people who 20 years ago moved many manufacturing operations. They understand the issue, problem and how to avoid having an optimistic estimate.
I spent years of my career arguing that senior people had more IP on their laptops than was available in the knowledge system of the organization. I have come to realize that there is an even bigger problem than that room filled with IP on laptops. There is IP (Tribal Knowledge) that is walking out of the building after the person’s retirement party.
The knowledge the new economy needs is sitting in the old economy. We are letting those people ride off into the sunset without capturing what they know.
Want to know the pain of off shore manufactory talk to someone that set it up, ran it, and then retired. Those folks are out there. We just need to talk to them.
I argued with a crowd funding group recently. I offered to connect them to a smart, retired off shore manufacturing expert. They laughed and said the world is different now.
Their campaign failed. Because the reality is we’ve made things for more than 100 years. Recently those things have added connections to the internet, but we have been making things for more than 100 years. The process to build, manufacture and deliver things is the same now as it was 20 years ago. Those who forget the past, are doomed to repeat it (over and over).
Campaign running late? Ping me. I know people that can help!!!
.doc
IP dreamer