kubo, Kickstarter, and how crowdfunding works (or doesn’t)

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After a whirlwind thirty days, our Kickstarter campaign for kubo has run its course. We learned a lot, got some great press, and had a lot of fun. But truth be told: this was an experiment, to see how crowdfunding would work as a sales channel for a vehicle. And though we sold ten scooters and raised nearly $57K from 166 backers – money we don’t actually get, since Kickstarter is all-or-nothing – we also demonstrated that crowdfunding is perhaps not the best platform to sell a vehicle. No one had ever tried to sell a street-legal motorized vehicle on Kickstarter before, especially not one starting at $5000. So we had to try; and though we didn’t succeed, we learned a lot. What did we learn?

  • People love kubo! Countless emails, messages, and face-to-face interactions reinforced that we’re on to something with the kubo concept. People are into it. It’s an awesome vehicle at a competitive price point, and makes sense for consumer and fleet use.
  • Kickstarter campaigns are not run nearly as organically as one would believe. The typical story : a team puts together a compelling campaign around a great idea, broadcasts that as widely as possible, and backers flock to good ideas. Turns out that’s not the case at all. Successful large-scale projects are the culmination of at least 3-6 months of developing and scheduling sales, lining up future customers and coordinating them to pledge at specific times during the campaign. That’s even especially true for projects that “seemed to come out of left field”. That’s not the crowdfunding ideal of “supporting a dream”, that’s just adding a lot of complexity and headaches to an existing sales process. Is it cynical to think of crowdfunding as a “sales channel” rather than “funding creativity”? Well, possibly, but it’s also just a realistic assessment of the state of crowdfunding products vs artistic projects.
  • There are also a few aspects of crowdfunding that are perhaps off-putting to potential scooter buyers. The lack of any test ride or tactile interaction with the scooter is a major (and very understandable) barrier; those who didn’t find us at the SF Auto Show or one of our other public appearances in San Francisco were buying the scooter sight unseen. Crowdfunding also adds a level of ambiguity: “will it happen? Will they make it?” That perceived risk is acceptable when buying a $125 watch, but not so much for a $5000 scooter.
  • Why did we choose Kickstarter over other crowdfunding sites? There were a couple of main reasons. We were in close contact with Kickstarter after the scam Lit Motors campaign, and they mentioned an interest in vehicle projects. Also, Kickstarter is the most well-known of the crowdfunding platforms, and we wanted to tap into their vast community (~1.6 million repeat backers). Of our pledges, 21.65% ($12,274) came from that Kickstarter community. That’s worth it, right? Well, it’s a bit more complicated than that…11.35% ($6,436) came from search on Kickstarter, which is likely someone who heard of us elsewhere. So that’s more difficult to attribute to the existing Kickstarter community. Also, a total of 63 pledges came from that community, for an average of $194.83. The average pledge amount outside of the Kickstarter community was $431—over twice as much! So while 38% of our pledges came from within that community, those pledges were mostly for our lower rewards levels (t-shirts, sweatshirts, etc). For a project with a lower goal, that could contribute significantly; at $300K, that’s not a major source of funding. Regardless, would this situation improve on another crowdfunding platform? Not likely. Kickstarter’s community is vastly larger than other platforms; a white-label platform would remove that built-in community entirely. So we feel pretty comfortable with that decision.
  • Where did the majority of pledges come from, then? About 9.79% ($5,548) from 27 pledges came directly from our press coverage;  others may have first heard of the project via press and then pledged directly, but those are the direct click-throughs. That’s an average pledge amount of $205.48. The largest single source of pledges – 75 pledges, 57.95% ($32,839) – was our existing community, through our site, mailing list, and social media (if you’re reading this, likely you!). Our community’s average pledge amount was $437.85, even higher than the average non-Kickstarter-community pledge. Clearly our existing community was the best source of pledges, which matches the general consensus about crowdfunding.
  • The biggest issue with crowdfunding a vehicle, however, is the length of the sales process. By “sales process”, I mean the entire process from a person realizing they have a need/want, to researching available options, to actually making a purchase (and the follow-up, but that’s not relevant here). For most potential scooter buyers, that process is much longer than a 30 day campaign. So to sell a scooter “organically” – as opposed to the scheduled sales mentioned above – we needed to either find people willing to make snap decisions, or people near the end of the “research” phase of the sales process. That’s a pretty limited subset. Additionally, we needed to actually reach those people; this would come from either our existing community, the Kickstarter community, press, or word-of-mouth. We pushed each of those channels, but again: limited subset. So this combination of limited visibility and a lengthy sales process wasn’t very compatible with the limited 30-day sales process of a Kickstarter campaign. Though unable to change the duration of the campaign once live, we could have set the campaign to run as long as 60 days. Kickstarter’s statistics indicate diminishing returns on longer projects, but perhaps we would have been an outlier—there’s no way to know from existing data.

So where do we go from here? Well, we’re definitely continuing with kubo! The fundamentals of our plan remain unchanged: we’ll continue to raise money, hire a separate team (no impact on C-1 development!), and move towards production. The production timeline might shift a bit, but we’re definitely not shelving the project. It’s an awesome vehicle that people love, we just need to shift the marketing/sales strategy. Our current aim is to begin production in summer 2014. You can pre-order your own kubo here, and pre-order a t-shirt or hooded sweatshirt as well. (Kickstarter backers, look for a special link just for you in a separate message on Kickstarter!)

I’d like to close with a huge THANK YOU to our 166 backers! We appreciate your support, and we’ll keep you in the loop about future kubo developments. Thanks to:

mmalc_crawford, Mike Miroshnikov, Tom Lokenvitz, Nikolay Belousov, Darryl Duffe, David & Sarah Wolfe, Jason R. Couch, Jennifer Golda, Jacob Bangert, Gregory Leff, Geoffrey Tangen Aravanis, Tom McIntire, Egon Heuson, Ashish Awaghad, Steve Kostelnik, Maegan Spencer, Merlin Lyons, Tieg Zaharia, Gaylon Vickers, Ian Smith, Donnie Fair, Ocon, Gary Youre, Essam A. Ismail, Phillip Arrington, Uri Baran, Joshua Tulberg, Somanos Sar, Joseph Annigoni, Vicki Olds, Nicholas Paciorek, Johonna Nutter, Jesse Lubbers, Joseph Cohen, Ryan Fernan, Sunder Chitturi, Don MacDonald, Kevin T. Nelson, Sam Krieg, Brian Brunswick, Judi Gillies, EJ Mablekos, Edith M Avallone, Nathan Church, StartUp Genesis, Dennis McFall, David Orr, Marco Morales, Robert-Jan, Charles Yan, Don Gateley, Andrej Gobec, Sylvia Engelman, Klaus Reichert, Mikael Rosenius, Tomas Måsviken, pirmin, Heiko Apel, Andrea Casadei, Jason Blackwell, Andrei Sarusi, Max Salomatin, Mike Collins, Ian Clarke, Rakesh Sahay, Elliott Spelman, Laxma Reddy, James Lofshult, Jay Hinkhouse, Adam Oliver, Lydia Dallett, Stefan Sain, Ray Denison, Renee Lusano, Kayvon Tehranian, Rick Anschutz, GenWaylaid, Lere Williams, Eric Gasser, Mateo Hao, Michael Daniels, John Stovall, Peter Gajar, Sunil Mehrotra, Covena Design, Colin Palmer, Adrian Yao, Chris Niewiarowski, Jörn, John Wyss, Elizabeth Ostler, Marillyn Cole, Rex Chou, Walter Cooke, CrowdEnergy.org, Luis Grisales, Sophie Schmitt, Todd Johnston, Chai Guy, Gene Caldwell, Denholm Reynholm, Peter Schnare, Drew Paik, Grant Baker, T. Bass, Jean-Paul Langlais, SW, Dave Hamby, Ellen Wang, j. faceless user, Pete, KentKB, Matt Abrams, Patricia Helfrich, Tim Duquette, Robert Mitchell, Gary Krohmer, James Gambucci, Matt Eskandari, Riccardo Sarijoen, Sembian, Yuen Daniel Cheng, John Yost, Nikolaj Lepka, Nick, Alexei Morlender, Haamedullah Nasir, Eliáš Bauer, Omar Restom, krsch.com, Olivia Roberts, Florian Goette, Onil Maruri, Jon Simons, Tony Yates, Chandra Prasad, Doron Enav, Doc D, Abraham F., Jerad Sloan, Sam Bargetz, John Tvingsholm, Richard Beierwaltes, Chris Maka, James Brown, Moritz Meenen, Douglas Chin-A-Young, Greg Harding, Carlton Solle, Callie, Ian Duncan, Greg Pfeil, Peter Eberl, Mike P, Mark Hurst, Jan Kellenberger, Jeffrey Bergier, Joel, Jorge Daniel Garcia, Joshua Lake, Masten Brich, Egon Lucic, Corey Hasty, Tony Amaya, Troy Rank, and Max Torres!

  • jeffrey kloth

    I was put off because thoight the Kubo was originally going to have the gyro system, no?

    • Lit Motors

      Nope—it’s not enclosed, so there’s no need. And it’s a much simpler, cheaper vehicle; that wouldn’t be possible with a gyro system.

      -Ryan

  • http://asymoto.tumblr.com/ Oliver Bruce

    Hey guys,

    Great analysis and good to see you coming out of this with a positive attitude – the learning is good, and your points about buying cycle times were ones I hadn’t considered and are very valid.

    How does any of this learning impact your planned rollout? Did you have much international interest? I notice that you’re selling the pre-order for the full amount. If I may suggest, the option of buying earlier in the production run was what motivated me to put down my money on the C-1. Perhaps you might find more buyers willing to place down a deposit now for a production slot.

    Either or, keep up the good work. Can’t wait to see the next C-1 prototype!

    • Lit Motors

      Thanks for your feedback, Oliver! We’re definitely continuing with kubo. This will likely push our planned production date for the scooter back a month or two, but won’t completely derail it. We did have a fair amount of international interest, in spite of our only targeting the US. We’re looking at ways to accelerate kubo’s international rollout as well.

      -Ryan

  • Bill Schwieder

    KUBO = $5,000? Is that the expected MSRP when public sales gets underway? When I first learned of KUBO, I had hoped that it could be an alternative to the gas operated unlicensed scooters that are everywhere on the east coast. Kids and young adults will still buy the scooters and pay $800 + for a new one. The older citizens would find KUBO an attractive non-polluting alternative because it can carry groceries or pets in carriers, but not at $5,000 each. That’s just my opinion. I hope your marketing people have researched a broad potential sampling on a competitive pricing model. You can expect Chinese knockoffs once it is marketed.

    • Lit Motors

      Our current price for kubo is $6000. It’s important to note that kubo is a fundamentally different vehicle than an $800 gas moped. kubo is capable of reaching 45 mph and can carry 300 lbs, even up hills. It is comparable to a Vespa (price range: $3300 – $7000+) in both utility and build quality.

      -Ryan

      • Bill Schwieder

        I wonder how many Vespas are sold annually in the USA versus mopeds. How large a market does that represent?
        Vehicles capable of speeds greater than 35 mph require licensing and insuring and the operator must have a motorcycle operator’s license in my state.
        I’m sure the KUBO build quality is superior to mopeds, but the $6,000 price will be a distribution impediment in spite of the quality. Again, This is just my opinion.

        • Lit Motors

          We looked at making kubo a “moped”, which would involve both limiting power and top speed. It would have made a fundamentally compromised vehicle that would be neither useful nor fun. Yes, kubo will require a motorcycle license—as does any Vespa or any other scooter.

          -Ryan

          • Bill Schwieder

            I sincerely hope KUBO is successful in spite of my concerns. In time, the maximum speed decision could be revisited from an engineering/marketing perspective if it suits company goals.

        • Ashok

          Thinking of markets like India and China, bringing down the price to less than $3000 and adding an extra seat, this could be a great kubo-taxi!!

  • prostovanka

    To be honest I’ve attempted to contribute on Kickstarter but #1 problem as their payment method. Amazon? Really? I truly believe that #1 problem Kickstarter has is their payment system. Allow payments from PayPal and that would change the game.

    • Lit Motors

      It’s true, the locked-in payment system is not ideal. As an indicator: we actually had to fax a form to them in the sign-up process. FAX. It’s mind-boggling that anyone would need to fax anything ever in 2013.

      -Ryan

      • prostovanka

        I kid not as I was attempting to contribute for Kubo on kickstarter, amazon was asking me a whole lot of questions about my income, my social among other things and after keying in all the info they requested in the end I couldn’t contribute because of something error-ing out :(

        @Ryan you’re an awesome guy for personally replying [reminds me of some one...(Steve)]
        Are you by any chance showing off Kubo to the public this weekend?

        Also do you have any spots for Volunteers @Lit Motors?

        -Ivan K. (Sacramento)

        • Lit Motors

          Thanks! Unfortunately no public kubo demos currently scheduled, but we’ll have more in the future—keep an eye on this blog! And I’ll let you know about volunteering as well!

          -Ryan