ALL BEERS CONSIDERED #24

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The boys are back and babblin’ ’bout:

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4 comments

  1. Anonymous · · Reply

    Good news rundown this week. Feel like I should send you guys a Voodoo Donut beer to enjoy during the next podcast.

  2. Please do; I would enjoy reading their tasting note for it.

    I never know quite how to feel about Kickstarter. I have misgivings about it that nobody else ever seems to share, when I try to explain it. What it boils down to is this:

    In it’s most basic form, raising funding through Kickstarter is like a more organized form of panhandling. The one thing that separates it, obviously, is the promise that “when I get this brewery/other project together, I’ll pay you back in the form of the incentive level you donated to get.” There are issues with that, though, that I’ll get to later.

    The other basic issue is the difference between “givers” and “takers.” The only way that a website like Kickstarter can possibly function is if the majority of people ONLY give without asking for donations themselves. If 100% of people donated but also asked for funding, we wouldn’t/couldn’t get anywhere. The system only works when a small percentage of people ask for funding, and everyone else chips in to give it to them.

    The question, then, is what makes certain people decide “I am worthy of free money from a bunch of strangers”? Personally, I wouldn’t feel that way. I would love to open my own brewery, for instance. I’d love to get $50,000 from a bunch of strangers to do that. But do I think I’m exceptional or special enough to be one of the few who’s worthy of the money? No, not really. I personally feel like it’s more “honorable” to risk your OWN money in a project like this, not other people’s. This is what loans are meant for, right?

    Because of this dynamic, you’re always going to have only a small group of people with the high self-value to be able to DO this form of digital panhandling.

    Now, the response to that statement is probably “But it’s not panhandling if people are getting their incentive prizes,” but who assures that people actually do? As far as I’m aware, Kickstarter is not a legally binding agreement. Just because you chip in $10 and earn a brewery sticker, does that mean the brewery is legally bound to eventually send you one? I have to say I doubt that.

    What, then, happens if one of these places simply raises the money, makes a go of it, but hits unexpected problems and folds? None of the backers “get” anything for their contribution, except for the knowledge that their money is now gone. The negligent brewer, meanwhile, has been able to try his dream project AND fail without losing his own cash in the process! The punishment for his risk-taking falls to the internet funders instead of the person behind the project.

    I’m sure this sounds extremely pessimistic. I’m used to that reaction. But it is something I tend to consider when I’m thinking of supporting Kickstarter projects. And I have supported a number of them that I consider to be “safer” bets.

    What do you think? Am I just a d-bag?

  3. I don’t think you’re a d-bag, but I’m also not quite as pessimistic about the whole concept. Some of your concerns are simply the same concerns any investor would have to deal with, only on a more spread out scale. For example, in a failed venture, instead of one angel investor losing their initial $50k investment, you’ve got 1000 investors losing $50 (some much more than others, I’m sure, but you get the point).

    I don’t know enough about the site or the process to know what is legally binding or not (I’ve never donated), but from what I understand, it’s pretty clear that people who are donating are doing so more out of the goodness of their heart than out of a desire to make money (or have a beer named after them, etc…) The point of the site is that it’s a way for the little guy (or gal) with a dream to get funding from other little guys/gals. Yeah, it’s sorta like an organized form of panhandling… except that it’s nowhere near as confrontational as a panhandler and there’s no big psychological barrier that needs to be broken through to ignore the panhandler.

    My impression from folks who have attempted to get funding through Kickstarter is that it is incredibly difficult to get funding. I think most proposals fail to get the funding. Those who are successful generally have something that is driving the venture. Perhaps they’ve built out a huge online audience with their blog, or perhaps they’re involved with the community in a way that makes people want to contribute – Kickstarter offers them a formalized way to collect funding from a large and diverse group of people. Again, the impression I get is that most of the people who get funded have at least a vague acquaintance with the folks who are contributing. I saw one homebrewer who was attempting to go pro through kickstarter. I didn’t see it on kickstarter, I saw it on his blog, where apparently lots of friends saw it (actually, I’m pretty sure one of his friends directed me to his blog via a tweet or something). Many of the people who contributed posted a comment on his blog, and from what I saw, they were friends, acquaintances, and strangers who had actually tried some of his beer at a competition or something. I didn’t contribute because I’m a cheakpskate and because who is this guy? But I think that’s the point. People apparently knew this guy, even if he didn’t know them that well, and that’s why he got funded.

    But if I did contribute to something like this, I can say with all honesty that anything I got back from the experience would be a bonus, not an expectation (obviously, if they promise a sticker or a beer naming or something, I would hope they would follow through, but I wouldn’t expect a massive windfall because I put in $20 on kickstarter)…

    I don’t know, I guess I just don’t consider a kickstarter venture to be a guaranteed success, so I wouldn’t really expect to get much out of it other than the good feelings of supporting a small, independent guy – presumably a guy I kinda know…

  4. I would love to try the Voodoo Donut Beer… it can’t be as bad as the reviews have said, right?

    As far as Kickstarter goes, I think the degree of difficulty was easier for the first guys that did it because the tagline “own a piece of a brewery” seemed so cool and unique. Going forward as more people attempt to get funding through alternate means (traditional bank loans aren’t an option for everyone) you’re probably going to have to present something really creative about your brewery that enables you to stand out from the crowd… or as Mark notes, have developed a large social graph that you can tap into. Otherwise you’re just not gonna get funded.

    I just heard about Black Star Co-op Brewpub in Austin that celebrated its one year anniversary; funded by about 2800 of its members.

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