The last couple of weeks I have been fascinated by watching the Ycombinator-backed Lockitron raise nearly $2 million as of today through a self-hosted product demonstration and pre-production orders for a device which lets its users remotely lock/unlock a deadbolt using their phone. These guys were turned down by Kickstarter because it was a “home improvement” product and within a matter of days pressed forward with the launch of their version of a crowdfunding platform by offering the not-yet-built product for sale on their own site. Of course, they had to find a way to manage the orders and decided to use Amazon Payments, but what really made this a success it seems, besides good luck on timing and promotion which everyone always needs, is a few other very smart decisions:
Number One. They (meaning founders Cameron Robertson and Paul Gerhardt) decided to batch delivery dates to certain numbers of orders in the priority in which they were received so that they can manage product development, manufacturing and shipment and avoid over-promising.
Number Two. Payment information is collected but charges will not be processed until the product is available to ship. This is the only way to successfully sell something that does not yet exist.
Number Three. The product is simple and solves a real problem. Great ideas aren’t worth anything until execution but you still have to have one.
Number Four. They got all of the basics right. The Lockitron.com website is clean with all of the most relevant information beautifully organized. The sale is promoted by highlighting exactly what product does: “keyless entry using your phone” with a great product demonstration video. They also nailed it by neatly promoting the shipment date, price, and that your card won’t be charged until the Lockitron is ready. From top to bottom the site makes a great case, even including a laundry list of FAQs.
Now, I have absolutely zero personal knowledge or association with the product or its founders and do not intend to endorse the product or any other product through this forum, but I point out Lockitron’s recent success as an example that will, and should, be repeated. We are in an era, where startups without any revenue can become very valuable e.g. Instagram. We have also seen a way for products (rather than software) to find a way to raise funds vis-a-vis crowdfunding with Kickstarter being the trailblazer. So, what we have seen is that even a great add-on product can become a reality with well-managed development and promotion even relying upon self-hosted fundraising. And if executed well enough, this should become the preferred approach because there is no detachment of the advertisement from the product’s home and the consumer can see the whole picture all in one place and has the ability to make a more well-informed decision about the type of company or product they are choosing to spend their money on. For unproven founders and companies, this is all the more reason to want to get folks to see everything you’ve got all in one place.
I anticipate that Kickstarter will continue to be relevant as it is very convenient to go to one place both from the founder/developer perspective and from the consumer perspective. But, I also believe Lockitron has showed us that the crowdfunding space is not locked down and that the best will be found wherever it is. Now that the Pebble Watch has an unlikely step-sister we’ll wait and see if either or both can make good on their promises.
11/19- Update: As predicted, another company has taken the path of Lockitron. Now, Lumawake has adopted the open sourced framework made available by Lockitron after being similarly rejected by Kickstarter. Lumawake promotes itself as the “The first SMART dock for all iPhones” and is already 13% funded within hours of launching its preorder site. Not surprisingly, the appearance of Lumawake’s site is nearly identical in form and style as Lockitron’s, with the only difference being content promoting a different product. Props to the Lockitron guys for quickly sharing something extraordinarily helpful–at least the Lumawake team surely thinks so.
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