Kickstarter CEO on the Future of Crowdfunding

Kickstarter Reaches $6 Billion Milestone, Navigates Pandemic Challenges

Kickstarter announced on Wednesday that its backers have collectively pledged $6 billion to over 200,000 projects throughout the platform’s history. This achievement occurred just over a year after the platform surpassed the $5 billion mark.

Recent Challenges and Resilience

However, weeks before reaching the $5 billion milestone, the company disclosed challenging news. Kickstarter reduced its workforce by 39% through layoffs and voluntary departures, as the newly appointed CEO, Aziz Hasan, reported a 35% decrease in new project launches.

While many companies faced significant setbacks during the pandemic, this didn’t lessen the impact of a downturn with “no foreseeable recovery,” according to Hasan. Despite these difficulties, the platform has demonstrated resilience.

A Billion-Dollar Boost

Over the subsequent 15 months, an additional $1 billion in pledges were made, suggesting that predictions of crowdfunding’s decline may have been premature. Like many others, the pandemic prompted a shift in priorities and a refocusing of efforts for the platform, long recognized as a leader in the crowdfunding space.

Looking Ahead: The Future of Crowdfunding

After twelve years as a prominent figure in crowdfunding, several questions remain. The past decade witnessed a surge of enthusiasm for this funding model, but for some, that initial excitement has diminished due to unfulfilled promises and incomplete campaigns.

What does the next decade hold for crowdfunding’s most well-known platform? And will the pandemic fundamentally alter how individuals support projects online?

We interviewed Hasan to discuss the past year, the company’s significant milestone, and the future trajectory of crowdfunding.

(This interview has been condensed for brevity and clarity.)

CEO’s Vision and Initial Changes

When you assumed the role of CEO in 2019, what changes did you believe were necessary?

I want to emphasize my longstanding connection with Kickstarter. For me, it’s a place where my personal passions and daily work align beautifully. During my initial all-hands meeting, I expressed that the rewarding aspect of my role is returning home each evening to illustrate.

This allows me to intimately understand the challenges, insecurities, and uncertainties faced by creators. My daily focus is on finding ways to improve their experience and simplify the funding process. This underlying motivation drives me.

I believe our greatest strength lies in assisting creators in securing the funding they require. A significant opportunity lies in recognizing the crucial role of backers. For a long time, we concentrated on creator tools, ensuring they could effectively share their projects.

However, backers are integral to this process, and their enjoyment, curiosity, and engagement are vital. We can dedicate more focus and attention to enhancing the backer experience.

Improving the Backer Experience

What does it mean to impact the backer experience? How has it evolved over the past two years?

Firstly, it involves simplifying the process for backers to discover projects that resonate with their interests. Simply presenting projects on a homepage or through known creators isn’t sufficient. We’ve been utilizing various channels, particularly through email and newsletters, to connect backers with projects they might enjoy.

We’ve developed a recommendation engine over the last few years designed to improve connections based on affinity, past backing behavior, or projects they’ve shown interest in.

Navigating the Pandemic and Layoffs

Early last year, Kickstarter underwent substantial layoffs – reportedly 40%. How did the company navigate the initial stages of the pandemic, and what steps were taken to stabilize the situation?

Initially, creators mirrored the uncertainty felt by everyone else. We observed a slowdown in project launches and a 40% decline in pledge volume. Consequently, many projects were impacted, creating a concerning situation.

Our primary concern was ensuring the long-term resilience of our business and establishing operational stability to withstand future uncertainties. This challenging period prompted us to reassess our structure.

However, backer behavior remained consistent. Even with fewer projects being launched, backers continued to enthusiastically support creative work. Pledge rates and success rates, particularly within the games, comics, and publishing communities, remained high.

Approximately four to five months after the initial dip, creators began returning to the platform, recognizing the continued support from backers. This insight led us to reconnect with creators and reassure them of backer commitment.

Building Resilience for the Future

What does it mean to be well-positioned for future uncertainties? This is the first major pandemic in recent history, but it likely won’t be the last. What can a company of Kickstarter’s size do to strengthen itself against unforeseen events?

For us, it’s crucial to understand how we operate, ensuring we have sufficient business buffers and operate with confidence in team stability and resilience.

Our most effective strategy – and what we observed during the pandemic – is to prioritize project discovery and creator funding. This is the core of our business and our mission. By enhancing our ability to connect creators and backers, we can strengthen our position for the future.

Being nimble in designing tools to facilitate this connection and initiating campaigns will be key to our continued success.

The Pandemic’s Impact on Crowdfunding

How transformative do you anticipate the pandemic will be for crowdfunding in general?

Throughout this period, I’ve observed a heightened appreciation for the value and importance of creative work, as it has provided solace and entertainment during uncertain times. People have rediscovered hobbies, passions, and projects they previously postponed.

I believe crowdfunding is an excellent mechanism for independent creators to pursue their vision and secure the necessary support and resources. I’m optimistic that this interest will continue to grow, as evidenced by the $6 billion in pledged projects.

Addressing Past Issues and Building Trust

How can Kickstarter regain the trust of those who have been disappointed by unfulfilled rewards or abandoned projects? Are you taking a more proactive role in ensuring project completion?

Even amidst the pandemic, creators faced manufacturing and shipping challenges due to industry disruptions. What’s been remarkable is the increased transparency and communication from creators, even when facing uncertainty.

We’ve long advocated for open communication between creators and backers, fostering a sense of transparency. This benefits both parties: creators can share updates, and backers feel connected to the project’s journey. Backers often express a strong desire to be involved and understand the process.

Rewards vs. Equity

Rewards-based incentives have been central to crowdfunding. Is this still the most effective way to attract backers, or could equity in a new company play a role in incentivizing participation?

I remain confident in the strength of the rewards-based model and believe it will continue to grow. Creative rewards are particularly engaging. It’s about more than just receiving a product; it’s about supporting a vision.

We encourage creators to deliver on their promises and maintain clear communication. Backers should understand the inherent risks but expect transparency and engagement. The more successful projects we see, the more excitement and curiosity we can foster within society, and we all need that right now.

Kickstarter’s Future Beyond Crowdfunding

You’ve previously discussed a future for Kickstarter beyond traditional crowdfunding. What does this mean for a company so closely associated with the category?

I believe the potential of rewards-based project crowdfunding is far from fully realized. More independent creators are emerging, and backers are increasingly seeking unique experiences and creative projects.

I’m confident that we can continue to connect creative work with those who will appreciate it and provide the necessary tools with minimal friction. Especially in light of the pandemic, ensuring our tools effectively serve their purpose is paramount.