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how Occulus made a Billion Dollars and all I received was a lousy T Shirt !
Kickstarter has the potential to subvert the traditional startup and PR funding model. Previously, one had to give up control and/ or precious cash to receive start up funding for a project. VC investors demanded a substantial equity share, and a seat on the board to oversee their investments. Principals of startup companies had to have a substantial amount of their own assets at risk and be willing to personally guarantee debts before a bank would consider underwriting a loan. In both cases, if the company ran into problems or went bankrupt, the principals would lose everything. Even if successful, the company would have to pay for expensive PR in order to let the world know about their product.
With Kickstarter, all one needs is an idea. Create a compelling concept, with reasonable contribution terms and the world will literally beat a path to your door. You keep all of the equity (bye bye VC vultures), and you get to keep the money without paying a dime in interest (bye bye banks) ! And you get valuable PR that cuts across multiple genres and outlets.
Think about it. What would stop someone from making a "valiant effort" but ultimately keeping all of the money? In the Producers, at least the protagonists went to jail. With Kicksterter, contribution is voluntary but ultimately without any recourse if the company fails to deliver. And it's perfectly legal.
Follow Ups:
Ross-
I like the concept here. As one of the few people out there, (or so it seems) whom can 'think outside of the box', kickstarter is doing just that.
... put in place in the 1930's prevent ownership stakes in those sorts of companies without a certian amount of wealth.
So you get the T-shirts and "they" get bought out.
THey might change soon, but for every Oculus there are 3 dozen companies that can't even fulfill their pledges.
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Hey! I have a blog now: http://mancave-stereo.blogspot.com or "like" us at https://www.facebook.com/mancave.stereo
Two teams in the Final Four.............
I have no idea how valiently Kickstarter polices the bona fides of the frontmen of their projects.
Back when I practiced law full-time, I heard the sob story of an assembly-line employee who was told by the new owners of his (IIRC) rubber-boot factory that the whole place would go under and he would lose his job if he would not volunteer to be the frontman for a new company to take over, "after all the bad debts had been flushed away."
So, of course, we will eventually learn the name by which the New Crowdfunding PONZI Schemes should be called.
Lesson: Human Nature has no history.
When Cain slew Abel, he thought he had a reason.
JM
You are operating under "caveat emptor" when you buy something form someone who promises to deliver it.
When you become a shareholder? Different rules apply, and you can't just go an invest in a startup (yet) without proving a certain amount of net worth - i.e. you can "afford" to lose your stake.
It does look like the law, created in the 1930's, might be revised or eliminated, but it is in force right now, which is why you NEVER get an ownership stake in any of these companies.
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Hey! I have a blog now: http://mancave-stereo.blogspot.com or "like" us at https://www.facebook.com/mancave.stereo
I can't flap my wings and fly.
But if I can tolerate the (small) risk of ignoring or violating state or federal Blue Sky laws, I can sign up investors and not care a bit whether they are factory workers handing over their lives' savings.
A stupid undergraduate I met at a party not long after I graduated from law school intently asked me if she got pulled over for speeding, could the cop look in her handbag (she admitted that most likely it would contain drugs)?
I answered, "Of course."
She spluttered, "But what's his probable cause?"
In my best Auric Goldfinger, "No, Mr. Bond--I expect you to die!" voice, I replied, "Sweetie, he can tell you to make like a Hoover on his wing-wang. That doesn't mean he won't eventually get into trouble if you complain. But he's the guy with the gun, and if he says, hand over the purse, you hand it over. Also, if the purse is within 'grabbing distance,' he can make sure it does not contain a gun."
The fact that a law exists is not a guarantee it will never be violated. Quite the reverse.
Let's imagine that that Tom & Jerry Audio Company is in real financial trouble; their secured lender is about to put them into state court receivership. So Tom and Jerry advertise a vaporware USB DAC at $250, and collect $50,000. They split half of it to bring their salaries up to date, and then give the rest to the secured lender. Months later, things have not turned around, and they put the business in Federal Bankruptcy Liquidation. Their USB DAC customers are last in line.
A few of those get publicized, and the bloom will be off the crowdfunding rose.
JM
I've participated in a Kick-Start idea that had no real ROI, and that's fine with me. A small-town movie theater had to convert to digital or go under. The place had been around for 90 years, serving a remote community and I gladly kicked in $100 because it felt good. I DID get a cool move poster out of the deal, but that's not why I did it.
They exceeded their goal by 10% and someone found two used digital systems so they can convert BOTH screens for pennies more than one. Everybody wins.
Interestingly, there is nothing in the bible to indicate Cain bothered to formulate a sound "reason" for doing what he did. Cain did what he did while caught up in a flurry of anti-reason.As the Bible story goes, after God dismissed or disapproved of Cain's SACRIFICE (not indicated to be a rejection of Cain himself) the jealous, upset, and unreasonable Cain is depicted as having lost his ability to learn. Reasonable assurances from God himself, to the effect that everything might be just fine again if Cain kept on trying, were unable to penetrate Cain's defensiveness. And because Cain was no longer in a mood to listen to the old God who had embarrassed him so, Cain determined to create an entirely new world order for himself.
Vegetable farmer Cain then bitterly and mockingly "sacrificed" livestock rancher Abel to a new god, the god of Pride and Power. Bitterness and sarcasm characterized the new world order as Cain, mocking both God and Abel's sacrifice to God, sacrificed Abel as if he were just another lamb culled from the flock.
Swaggering onwards, Cain then mocked both Abel's former profession and God's loving nature in his flippant reply before God's face ("Am I my brother's KEEPER?").
God knew then that Cain was in full psychotic flight, and that there was simply no trusting him after that point. God therefore banished Cain to the nether regions of the earth. The rest is "history"...
If anything, the Big Book teaches us that the lack of reason is our biggest problem.
Edits: 03/31/14 03/31/14 03/31/14 03/31/14 03/31/14 03/31/14 03/31/14 03/31/14 03/31/14 03/31/14
BTW, I like the movie a lot. Flawed, to be sure, but a lot of fun, and all of the Khachaturian in the soundtrack doesn't hurt!
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