By Cheryl Conner, I posed that question this week to my friend Dr. Phil Windley, an expert technologist, Executive Producer of IT Conversations and a serial entrepreneur. He and co-founder Stephen Fulling have launched multiple ventures together beginning with iMALL Inc., which they sold to Excite@home in 1999. Disclosure: I have no current business relationship with Windley and Fulling but provided PR counsel to their company Kynetx in 2009-2010.
This week Windley and Fulling crossed another horizon together when they pressed the Launch button on their first crowdfunding campaign with Kickstarter to fund a project called Fuse. Fuse is a device that uses a built in GPS and cellular modem to stream data from your vehicle into a personal cloud. The device provides space-age app functionality such as mapping out a car pool route and pinging riders with an automatic call or text to let them know when you’re close. It can keep tabs on the driving habits of teen drivers (NPR has had some interesting things to say on this front). The device also manages fuel economy by calculating best times and locations to fill up and manages car expenses by alerting owners to maintenance needs by accessing the engine codes that only the dealership can normally read.
As I might have suspected, the product also proves a point the two founders are making: that there are new ways for technology to coalesce across many devices and platforms to produce surprising outcomes that are entirely customer driven.
In other words, in addition to the funding, the project is a PR and messaging mission to validate the company’s technology foundation while it kicks off the development of an extreme coolness factor device. So why did these experienced executives launch their idea on Kickstarter as opposed to using a traditional funding model and a traditional (ahem) public relations campaign?
Fuse is the first foray into crowdfunding for serial entrepreneurs Windley and Fulling
Says Windley: “The primary reason I like the idea of Kickstarter is that it validates an idea. For a small investment in time and money to create a good video and a compelling message, we can test whether or not this is a product or an idea that people will actually buy. The money we’ll make is likely small potatoes compared to what we’d raise in a typical funding scenario (unless it really takes off). But the big payoff is the information about the potential market we’ll get.”
Windley and Fulling are far from alone. According to Social Media Today, Kickstarter has produced $786 million (as of Sept 2013) in funding and is a great case study for the benefits of crowdfunding.
However, while crowdfunding is great for the purposes Windley and Fulling are envisioning, far too many entrepreneurs jump into crowdfunding as the potential “answer for everything” without also considering the risks. A full 10 perent of projects on Kickstarter complete their rounds without receiving a single pledge, and 56 percent do not get funded because they fall short of their goals. (However, it is important to note that even incompleted campaigns produce valuable market research and feedback to entrepreneurs about the reasons their ideas aren’t ready for prime time just yet.)