During the 2010s, a number of huge enterprises got investor money, started a project, maintained it with great success until the investors started wanting their money back, and then the service of the project started absolutely sucking – if it actually managed to live through the ‘you must turn a profit’ phase of its growth, which many did not.
The internet had a hand in this. By giving a large crowd of people a place to say they’d definitely use any service that does X, investors can see demand for a product that doesn’t yet exist, which makes a return seem easier to achieve. A secondary effect is that they don’t have to understand what the service does, they just have to know that customers want it – a formidable barrier for innovators of times past is now an escalator for inventors who can simply dazzle a crowd with buzzwords and get demand out of them. Customer/investor hybridizing sites like IndieGoGo and Kickstarter were notorious for this until they also changed their terms of service.
Smaller Ones
More attainable goals on crowdfunding websites are not less likely to run into issues than their larger funding counterparts, they’re just smaller. The stakes are usually lower, but often still painful if they fail. After all, if you pay 1,500$ to get an extra special package of products and services for a startup that goes belly-up before anything goes out the door, you’re out the money, even if it probably didn’t bankrupt you. IndieGoGo and Kickstarter generally can’t recoup that loss for you if the side taking the money didn’t formally announce a failure or otherwise initiate a refund.
Unfortunately, it can be hard to tell when a project is going to fail, especially if you tried to get in early. While some projects can raise red flags on first sight (unrealistic wholesale/retail product pricing ratios, overemphasis on a personality to sell the product, or unrealistic production means for example), many others look fine. The best way to avoid spending money with nothing to show for it is to look at other examples of failed projects and see if you spot any uncomfortable similarities.
Early NFT projects, for example, were totally uncharted. The product itself was so new that nobody knew what signs of scams or failure would look like. A number of NFT projects promised access to something of value (a game, a cartoon, a virtual world/networking site, etc.) for the purchase of the NFT, but once they were fully funded, a bunch of them would rug-pull their investors and bounce with the money. Some didn’t bounce (by which I mean they stayed in contact with NFT buyers), but still failed to produce anything. The Bored Apes project at least managed to make a couple episodes of the cartoon they promised, but because the show was pitched and directed by people specializing in tech, not animation, it didn’t exactly come out like Rick and Morty.
But say you wouldn’t have fallen for the NFT hype – it doesn’t have to look like a bad investment to be one. In a more recent, more material example, James Somerton’s film production company sucked up a ton of money (achieving nearly 10x its initial goal for fundraising) and then had huge wait times for the films promised, and the person in charge – James himself – was quiet for months, only rarely updating with news about the delays. James, a video essayist, was really well-liked up until a couple of months ago when some terrible news about his content came out, so his backers were extra lenient. They made excuses for him, and many possibly forgot they’d contributed to his project at all because of the length of the wait. Now, it seems unlikely he’ll get anything out the door at all because of recent controversies, and that money is probably not going to be refunded.
Similarly, video game projects from first time game-makers have a high chance of failure, oftentimes because they don’t know the true scale of the work required before they start developing it and promise more than they can deliver. Internet personalities will sometimes have an idea for a game that is far beyond the skill of the studio they partnered with to make it (which happened to the Yogscast group on Youtube) or become so invested in what they already had built beforehand that they won’t let anyone else touch it (which happened to the game Yandere Simulator). For beginners, starting wrong and having to tear down and rebuild is okay when it’s a private project, but when it’s someone else’s money, the idea of ‘losing’ progress makes them more likely to double down on a road that won’t produce a good finished product. Failed games that ‘should’ have been simple to make instead spent months in development hell with nothing to show for it.
Why Even Bother Talking About It?
As the next generation sidles up to the plate, it’s important to make sure they actually know what they’re doing when they whip out a credit card to buy or ‘invest’ in something. A lot of kids raised on electronics don’t understand the fundamentals behind the internet. Think about it – what does playing RoBlox have to do with learning how to type in a professional voice? Does buying skins from Fortnite tell kids that digital assets are only worth the joy they bring? Does watching Cocomelon on Youtube teach kids about online safety or that adults can lie to them? Just granting access to the tools necessary to learn important lessons isn’t the same as teaching, and can have disastrous consequences when they learn something the hard way. Without actual, guided teaching about spotting scams, these kids learn only what is necessary to have fun online, lose their data, get scammed, get viruses, and suffer for an assumed level of knowledge that they don’t actually have because they were only taught how to click and tap on things. It’s worth talking about. It’s worth teaching. It’s necessary. It probably always will be.
