"There's a whole bunch of different things Kickstarter could do about hardware projects failing to deliver. "
Such as what? Like offering insurance for failed products? Doing due diligence into creators? Or?
Any solution you come up with (and I do really want to hear your suggestions) has problems. If they vet it puts more liability on them and legally that would place them in a different position. If they offer insurance then they have to vet and the risk shifts to them which isn't the idea of what they are trying to do. So your thoughts are specifically?
> Such as what? Like offering insurance for failed products?
In a perfect world, Kickstarter could do just this - or even better, set up a prediction market* on whether the stuff will (eg.) ship on time. Then users could check the market price and decide whether the risk is small enough for them, and even directly hedge against loss.
Kickstarter could change their fee model to better align their interests with backers. For example, they could choose to not take their fee until the project creator has delivered on their project. This gives the Kickstarter team more of an incentive to vet the quality of projects and their creators.
I don't see why vetting would put any more liability on Kickstarter - all the 'responsibility lies with the creator' legal mumbo-jumbo can remain in place.
If you browse this thread you'll find lots of suggestions from different people. Probably other people will have better ideas than mine, but for what it's worth: I'd require projects successfully raising a large amount (say, more than the price of a midsized car) for hardware to agree a series of milestones, releasing the funds to them in stages. The precise milestones would be agreed on a project-by-project basis, but could include: Some money up front, some money when they have a preliminary electrical schematic and prototype on breadboard, some money when they have a costed bill of materials and a final prototype, some money when they have a feature-complete mobile app, and some money as the products start shipping and the invoices from manufacturers start arriving.
To put it another way, creators can't have any pudding if they don't eat their meat.
"to agree a series of milestones, releasing the funds to them in stages. The precise milestones would be agreed on a project-by-project basis, but could include"
My first reaction is that that's a good idea. But on second thought this would create quite a burden and bureaucracy at kickstarter to monitor and make sure the right thing happened. I would imagine that for that reason alone they wouldn't go for that but I could be wrong.
Well, in the case of the 'LIFX' bulb mentioned in the article, they've made a 5% commission on the $870,447 raised and I can't imagine too much of that would go on administration.
I agree admin costs would be a problem for smaller projects; if Kickstarter was only making $2500 total on a project they couldn't afford a thorough technical design audit. Some costs could be kept down with technology, e.g. prototype demo youtube videos, which creators should be doing to keep their backers engaged anyway. You'd risk rigged demos, of course.
Crowd funding is still a developing industry at the moment, and it's mostly assumption on my part that makes me think creators failing to deliver is going to be a problem. It's going to be interesting seeing what develops.
Such as what? Like offering insurance for failed products? Doing due diligence into creators? Or?
Any solution you come up with (and I do really want to hear your suggestions) has problems. If they vet it puts more liability on them and legally that would place them in a different position. If they offer insurance then they have to vet and the risk shifts to them which isn't the idea of what they are trying to do. So your thoughts are specifically?