Kevin Stecko is the founder and president of  He's been operating the business since December of 1999.

Some Problems With Crowdfunding

I’ve written before about our crowdfund efforts when we created a product page template that was a clone of a teespring page. We got the point where almost every shirt we launched on the site was starting as a crowdfund. And we had some designs that sold over 800 pieces. Everything seemed great at first, but eventually the cracks started to show.

I was reminded of those cracks when Hasbro had 2 crowdfunds via their “HasLab” that failed to fund on the website. One of the items had its deadline extended, the other item failed and wasn’t extended. This full size Cookie Monster replica failed outright. The Transformers Unicron figure was extended.

Problem #1: What if you are “oh so close”?

Unicron has sold over 5500 units with a goal to get to 8,000. There are resellers that will likely jump in and buy hundreds if not a thousand more at the last minute. These are companies that are smartly arbitraging the fact that Hasbro is not offering payment plans or international shipping. So really Hasbro is likely 80% of the way to their goal. They have already received commitments of $300,000! Do you have any idea how depressing it would be to walk away from $300,000?

Also, that’s 5500 people who are going to be upset that have to be notified. Are you volunteering for customer service the day the notifications go out?

Problem #2: What if the funding effort is a complete thud?

Believe it or not I’d rather have this problem than the “oh so close” problem. If your funding period is 2 months and it’s obviously DOA after a week you should probably kill it. But a few people will be upset that you didn’t give it a proper chance.

Problem #3: Crowdfunding doesn’t eliminate sunk costs.

A failed crowdfund is a huge loss because you’ve already spent money on designing the product. And chances are you’ve spent a considerable amount of money advertising the product. Crowdfunding gives you a chance to limit your losses but it certainly doesn’t eliminate losses.

Problem #4: The general problems with pre-orders.

List format works fine here as these are self explanatory:

  • production delays

  • manufacturer defects

  • cancellations

  • customers move and the package is undeliverable

  • Payment Issues: Hasbro is not charging the card, so they will get a lot of orders that the card refuses the charge due to funds not available. They are also going to push at least a few debit card users to overdraw and get hit with fees.

I love that Hasbro is being ambitious with their crowdfunding efforts. I believe their biggest problem is that historically they have not been a direct to consumer company. That means they don’t have a huge email list or social media presence to rely on to spread the word. Weirdly they didn’t even ask me to send out an email to my list of Transformers fans. I think they could have done a better job getting the word out.

On a similar note, can you imagine the cool stuff that Disney will be able to do once they have a direct relationship with an estimated one third of all US households via Disney+? Haslab already funded a gigantic and expensive Star Wars project, imagine if Disney+ gave it a push.

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