Let’s step back from this week’s California winter primer that consisted of some gloomy weather and torrential downpour. (Okay, there was a pretty good amount of warm sun, too; Southern California doesn’t really experience “winter”). But let’s imagine we are spending a nice summer day on the rocky beaches of a placid blue lake, the sweltering sun beaming overhead and coercing shore-side sunbathers into the refreshing waters. People are swimming, playing, gulping down cold drinks, and scarfing greasy, charbroiled burgers. It’s a great day at the lake, but as you reach into your ice chest for another bottle of cold beer and stretch to turn up the speakers blaring your favorite playlist, you can’t help but think there’s some modernity that you’re missing out on.
In an age where a tiny computer (one with better technology than the computers that sent a man to the moon) fits in your pocket and gives you access to the entire connected world, it’s not a far reach to think that your lake-going gear should be technologically advanced: an attached waterproof Bluetooth speaker so that you don’t have to reach for two different things when you want a drink and louder music, a rechargeable, battery-powered blender for making delicious margaritas, a USB charger for all of your electronic devices, and a bright LED light that turns on when you open the lid for those late nights on the water. This is your idea, it’s brilliant, and you know you could make millions.
So, what do you do when you have this bright idea? You could go to that filthy rich uncle of yours. But even if you have a rich uncle, who knows whether he is cut from the same, modern-convenience craving cloth that you are or whether he rather just pack a small lunch pail cooler for drinks and a fishing pole to catch grub? So, you could try to pitch your idea as a startup. Startup companies have boomed in the past decade, sometimes with inventors and engineers collaborating with the sole purpose of garnering some attention and selling out fast. Still, you need liquid assets to initiate your startup, and that’s pretty difficult to find. You might find some business mogul who is willing to take a chance on your half-baked ice chest idea, but she also might just send you off to the guys at the As Seen on TV store. You don’t think you’re quite ready for cheesy, over-the-top infomercials. Do you have any other options?
One of the tenets of capitalism is that if there is a market for something, someone will make a profit. That is pretty much a textbook definition of the verb “capitalize” (Notice the similar roots?). But it could be conceived that someone somewhere may have once had a great idea and couldn’t find any legs for it to get off the ground, no matter how much the public needed or wanted it. Most likely, if it was truly a great idea, someone else probably thought of it later or thought of an alternative, but that first great thinker, rich in creativity but penniless otherwise, spends sleepless nights dwelling on missed opportunities. Not anymore. The people have spoken, not with the flapping red meat that dangles outside their mouth, but with the flapping leather that is clutched tightly in their hands or sits safely in their pocket, providing a resting place for the green paper decorated with adored patriots and historical buildings. The people have spoken with cold, hard cash.
It’s called crowdfunding, and it seems to be the new wave of fundraising for novel ideas. That futuristic ice chest that I used as an example isn’t exactly hypothetical; the “Coolest Cooler” as it’s called met its project goal of $50,000 – and has since soared above the founder’s expectations and earned over $13,000,000 – by using the popular micropatronage website Kickstarter. I’ve talked a little bit about Kickstarter last month when I mentioned the SCiO, which can tell you exactly what chemicals are in various consumer products and fits on your key ring. Along with these two awesome inventions, Kickstarter has also successfully funded 3-D printers, big budget movies without the constraint of big budget studios, robots for your home, and over 75,000 other products and ideas (and even potato salad). Over 7.5 million people have donated more than 1.4 billion dollars to fund projects that they think they might want or need. Now, with the US GDP exceeding 17 trillion dollars, the funds
Here’s how it works: instead of requiring a venture capitalist to risk millions of dollars on an idea that might never work, the monetary burden is spread among each backer. You can choose to donate any amount – one dollar or one thousand dollars or more. Instead of one person donating a million dollars, you could have a project where a million interested parties donate one dollar. The total amount of fundraising is the same, but even if the business fails, backers only lose a single dollar rather than one guy losing a million dollars.
I should mention that it’s a little misleading to say “donate” though, since there are typically incentives for backers. For example, for the Totem Pen invented by Michael Ford (not me or even related to me), you could pledge $25 and get an anodized silver spinning top that can be used as a cap for a pen to make a cool desk toy. Or if you had acted fast, you could have pledged $45 and got the top with a sleek, silver pen to match. For the Coolest Cooler, the creator had a $2000 option (which is completely sold out) where he offered to fly to the donor’s home and be a personal bartender for a day, using the Coolest Cooler, of course.
There have been various crowdfunding websites that have popped up through the ages, some specific to different professions (like crowdfunding websites for teachers) or some that offer crowdfunded low-interest loans. Kickstarter’s approach was unique in that funding is all-or-nothing. If you pledge $20 to a project but it fails to meet its funding goal (over half of the projects fail still), you don’t actually spend that $20. This forces creators to really think about their budgets. It also provides backers with a ballot to vote (with their money) on products that they think are going to succeed without feeling discouraged by the burden of investing in a second-rate product. It’s fresh, it’s innovative, and it has the chance to change how inventors strike it rich.
By tapping into the interconnectedness of the modern world, crowdfunding has the potential to shift the way businesses and consumers interact. These endeavors are still in their infancy, but continual efforts by consumers could change the way innovation happens. More relevant to me and my own personal goals, crowdfunding could also change how scientific research is funded. Often (especially when reading about the IgNobel Prize), people might wonder why and how taxpayer dollars line the pockets of some crazy scientists. But with crowdfunding, the middleman is cut; people can choose the projects that they think will benefit society, align with their own morals and values, or just plain interesting.
Currently, Experiment is the top hit for crowdfunding science and is basically modeled after Kickstarter. Researchers pitch an idea with a budget, and if it doesn’t get completely funded, then the backers get their money back. If Kickstarter is still in its infancy, then Experiment is just a tiny zygote. The number of backed projects has barely hit triple digits and just under $1 million has been pledged. As a researcher, I see a few problems with Experiment. First, researchers are often very protective of their intellectual property. If I have a brilliant idea, I don’t want to risk being scooped by publishing my idea to the internet. Another issue is that with Kickstarter, backers are rewarded when pledging to a project. It’s difficult to produce something immediately tangible with a research project, and so typical consumers are not likely to throw their money into fundamental science (no matter how valuable it might be).
Still, I would argue that crowdfunding could improve scientific research by motivating researchers to really consider how much money a project would need and how to communicate the broader impacts to a more general population. In addition, the general public, who would eventually benefit from the positive results of these experiments, would feel a greater sense of community with scientists and engineers, which would make scientific research more palatable. I encourage readers to check out the experiments currently seeking funding on the Experiment website or just start thinking about what sort of research you would like funded. And maybe in the future, you might see my own project up there, hopefully with a “100% Funded” progress bar filled in.