Kickstarter to end Government Corruption

In my blog yesterday I talked about the value of culture, we know that it intrinsically has value because all participate in it – we just don’t want to pay for that culture. Serious problems. One of the biggest conflicts we have right now is within the internet users relates to content and other cultural icons. A lot of people want it to be easily accessible and other people want it tightly controlled. This of course has been playing out in our courts over the past decade or so.

One of the first people that’s influenced me in regard to culture and sharing and so on, has been Lawrence Lessig. He’s written a few really accessible books about copy right. However, he’s since moved on from fighting copyright extremism to fighting corruption in the US government. I wrote a review about his first book in this arena, he’s written two other since. He’s a big fan of how the internet works and truly believes in platforms like kickstarter (Which could help address some of my concerns from yesterday over keeping a vibrant market place of cultures).

To this end, he’s decided to create a super pac in the spirit of a Kickstarter campaign. He’s calling it MayOne in honor of “May Day” admitting that he’s using it as a call for help. A call to help fix the US government.

I think that this platform offers an interesting opportunity for all of those folks out there that hate our current political system. The initial campaign is to influence 5 congressional seats as well as push for 5 specific acts that will create real reform. Here’s a link to the reform bills they’d want to push form.

I’ve pledged money for this. Why? Because I think that we need to create change in the US government and I believe that Lessig’s plan has the best chance to work. He’s taking the long view and has a real plan for driving change. It’s not going to be an immediate fix it’s going to take several years for real change to happen. This is also a way to influence change with only a few dollars. The goal is to raise $1 million and Lessig will match that million. Their next goal is 5 million, which he will then also match setting up the war chest for 2016. His goal is to help get multiple reform candidates elected to effect change.

I think that this is a way forward and that most of the candidates that MayOne will support will also support things like Net Neutrality, Copyright reform, and similar topics that most of my readers are concerned with.

Kickstarter, Oculus Rift, and internet rabble rousing

The internet is mad that Facebook bought the VR company Oculus Rift. We shouldn’t be surprised that someone bought this company, it was going to have an IPO or be bought. There’s no doubt about that. The problem isn’t that it was bought, but the company that bought it.

Oculus Rift was a startup. Startups need money so they launched a Kickstarter Campaign and raised $2.4 million. Startup money typically comes from three groups of people in early stages (3Fs) – Family, Friends, and Fools. The Kickstarter campaign clearly is the fools. Not because they didn’t think the company would succeed, but that they thought they’d have a say in the end result. Kickstart has had other scams, such as the feminist blogger that was going to buy a bunch of games and show how awful they were (but didn’t). Kickstarter has always said that you are donating and has no control if you ever get anything out of it.

If a startup is successful with the money provided by the 3Fs (and this is a huge IF as this is typically called the Valley of Death in startup parlance), these companies try to get Venture Capital Funding. The VCs are the people that have a boatload of money and try to make even more by getting companies to “exit.” There are three options for “Exiting” a startup – IPO, Purchase by another company, or failure. VCs prefer your startup being purchased by another company – it has the least risk (you never can tell what your stock price will be – see Facebook’s IPO. To get this money you typically have to give up control of your company. This comes in two forms ownership and members on a board of directors. In some cases the VC will take less ownership for more members on the board. Apparently one of those people that owned a large portion of Oculus Rift was Mark Zuckerberg – he reportedly made $337 Million on the Facebook purchase of Oculus Rift. That means he owned roughly 1/6 or 16% of the company ($2 Billion sale and all). Supposedly 2 other VCs made roughly the same amount of money on the deal. Which means that the founder likely owned less than 50% of the company and could have been forced into the deal.

Effectively, the moment Mark Zuckerberg invested in Oculus Rift, the company was going to be sold to Facebook – as long as it was shown to be successful. What this means to me is that if you read or see Zuckerberg personally investing in something, expect Facebook to eventually buy it. Additionally, with Zuckerberg owning that large of a percentage of the company, there’s no way it could have been sold to any other company. It was IPO, Facebook, or bust.

With this broader context, I cannot be mad at either Luckey or the other leaders of Oculus Rift. They knew the game when they got into VC – even if you aren’t into making a lot of money when you start, your VC will push for a positive exit for themselves.

One of the angriest people about this whole thing was Notch, the Minecraft guy. He finds Facebook creepy and is upset that his $10,000 facilitated that sale. Even if he had gotten stock for his investment, he would have only had 0.42% ownership share over the company (assuming Luckey sold all his stocks through the Kickstarter which is unlikely). Unfortunately, it’s likely his stocks would have been diluted and the VCs would have controlled enough of the board and stock to force the sale to Facebook despite all the people that could have owned stock if the money had been raised through a Kickstarter alternative like Fundable.

When investing in a Kickstarter, you can’t get emotionally attached, you need to look at it as if you’re gambling. You might never get anything from it, but at least you helped someone else’s dream come a step closer to reality. I’m happy for the folks at Oculus Rift because they got lucky in a very unfair game. I don’t like Facebook either – but it was unlikely for any other outcome unfortunately.

Innovation, Kickstarter, Etsy, and First World Problems

Innovation happens at it’s best when companies have wide ranging experiences and sources for ideas. It’s been shown that leaders with a broad network of unique individuals across an organization have better ideas that can influence the direction and innovation of a company. It’s also been shown in other studies that a group doing research will have better results if the members have a diverse background. This is true in since in general as well. Much of the breakthroughs we see happen at the interfaces of scientific disciplines. Which is one of the reasons why it takes so long for paradigms to change in scientific communities – the old guard doesn’t want to adopt to the new truth. Scientists that move into that field from one of those boarder disciplines will be more likely to adopt that new idea than the old guard. A great example of that is physicists and biologists moving into Economics. They are bringing new ideas to economics that aren’t supported by the current theories but are slowly making head way (HFT use these theories more than classical economists).

Platforms like Kickstarter, Etsy, and Git Hub, make it a lot easier for unique ideas to reach a broad audience and enable collaboration. Github is all about collaboration between different coders, while Kickstarter and Etsy aren’t about collaboration but about sharing of ideas though design. 

Kickstarter and Etsy literally are market places of ideas. These places allow people to scratch the itch of sticking it to a corporation that might make a similar product and helping out the little guy at the same time. I personally like both places because I’ve found some really interesting presents for my wife that will likely be unique to the area I live. Essentially, Etsy is so low of volume that in a given city there might be one other person with that same item.

Many of the products fall into the “me too” category where they are fixing a minor problem that isn’t really a big deal. They are addressing first world problems. These are similar to the mobile app masturbation fest that we call Silicon Valley or San Francisco today. Some of these ideas are really novel or could lead to some cool concepts if given the support that they need. However, the ones that aren’t really useful won’t actually survive. They just don’t get the backing that they need – if they are a Kickstarter project or won’t have enough people buy stuff if they are an Etsy company. 

The other interesting thing about both is that once you reach a certain size you’re done. In Kickstarter’s case that’s reaching your financial goal to complete your project while in Etsy’s case if you sell too much you have to move on to a different platform. 

For the most part, these platforms are all about selling products or concepts that could be manufactured in different ways, but we want the hand made feel to it (or unique designs). I don’t think there’s anything wrong with that. Especially since there can be Kickstarters for documentaries and activities in third world countries.

That’s where the market place for innovation comes through. Aside from shipping concerns I don’t really care where the product is being designed or made. I’m purchasing them for the uniqueness rather than where it’s made. Some people might focus on that, I don’t however.

I will definitely use these platforms in the future. In fact, I essentially bought a watch on Kickstarter today because the goal was already made. I have no idea when I’ll get it, so when it comes it’ll be a surprise. Kind of like the wallet that I bought. I’m not super happy with it, but I’m helping someone’s dream come true. And that is really what I’m buying when I use Kickstarter.