Earlier this fall I read a news story about a Scotsman who raised money on a crowdfunding platform for a project that would purportedly send the world’s first postcards from space.
The project was in the news, not because the venture promised to strap a couple cameras to a weather balloon and take photos from twenty miles into the earth’s atmosphere, but because it failed to deliver on its basic promise. Angry customers formed an online revolt that led a newspaper reporter to take notice.
I don’t know if this SpaceCard was simply part of a clever self-funded publicity ploy to get the postcard app ByPost into the news, but the online reaction does offer another intriguing case study for my grad school terminal project.
Anatomy of a Typical Crisis.
My terminal project will explore crisis communication responses to crowdfunding crises. My interest was initially piqued last year after a company contacted AM:PM PR for crisis communication messaging help. They had created a great product funded through Kickstarter but were over a year behind schedule delivering the product. Additionally, the company was struggling to communicate its challenges to its backers and needed to open new sales channels to fund operations while navigating manufacturing conundrums. The appearance of the product for sale online before most backers received theirs threatened to create a firestorm of angry comments on review sites, which could have ballooned into news stories and increased undesirable attention. The situation was blunted with our help, and by honest and clear communication. No media picked up the story, and as of last check, the company is still quietly working away to get its product to its initial backers while concurrently offering its product for sale through a variety of channels.
The following apology video is for a project from Canada called the “Peachy Printer.” It raised $50,000+ on IndieGogo and another $650,000 on Kickstarter. Backers were supposed to get their printers in 2014, this apology video is from Oct. 2, 2014.
On October 23, 2016 the project creator posted updates at IndieGogo and Kickstarter to share news of police investigations after an investor was accused of using funds to build a house.
Since we helped that unnamed organization stave off a consumer revolt last December, I have been collecting stories like the “Peachy Printer” – and about other companies facing similar challenges. There are tons – from Seattle to Portland to San Francisco to Scotland and beyond. The challenges faced by these crowdsourced campaigns are similar to those faced by many entrepreneurial endeavors, and I intend to contribute to a growing body of research with my project.
I’ve already done a fair amount of due diligence exploring existing scholarly research that may apply and form a foundation for my efforts. There are entire fields of study that may be relevant including crisis communication, issues management and operations management-related studies. One researcher whose work I’ve enjoyed is Timothy Coombs. His research offers insights that may be applicable to crowdfunded campaigns, including the Situational Crisis Communication Theory. Part of the theory suggests that companies that are new or without a track record will receive more flexibility in the court of public opinion for their fledgling efforts to meet customer demand and expectations. The key component is clear communication, yet most crowdfunded campaigns (and startups) I’ve observed are run by passionate and proud individuals that aren’t quick to admit when they’ve made a mistake.
The Coolest Cooler is another interesting case study. The company created a cooler that includes a blender, Bluetooth stereo, USB charger and corkscrew in addition to other amenities. The company ran into trouble when it experienced manufacturing delays and then had to start selling its product through online retailers before all backers received their cooler. This led to negative commentary on review sites that de-evolved further into a crisis of communication when media began running with the story. My research will help to come up with guidance other businesses may follow to avoid experiencing the same painful dilemma.
Other similar crowd-funded products facing similar crises include a talking robot called Jibo that’s two-years behind its delivery schedule. The Glowforge printer, which broke customer’s hearts again this past week when the company admitted it wouldn’t get product out for the holidays, is now on track to deliver two years behind schedule.
These crowd-funded projects are fascinating to study because they provide an opportunity to observe consumer reaction to business decisions in real time. You can see what the company did (or didn’t do) to communicate clearly, and review and gauge consumer reaction. The information will help to inform future best practices for crowdfunded projects, entrepreneurs and traditional startups.