Hack a Day website is now on Kickstarter

[40hz]

Many of you are familiar with the website Hack a Day. If you're not, it's a great site for hardware hackers and mad scientist projects.

[attachthumb=#]

Recently, current owner Jason Calacanis announced he wanted to sell the site to a "good home" since his involvement with the launch of Inside.com has put him in the position where hackaday.com had to be let go before it suffered because of his need to more heavily focus on his new project.

Since hackaday.com is an established and profitable site, Jason's asking price is $500k USD.

The current editors of Hack a Day have decided they want to take a shot at it and have turned to Kickstarter to try to raise the requisite amount. You can read their announcement here. And the Kickstarter page may be found here.

I have very mixed feelings (both in a business and social sense) about the approach they're taking with their fundraising plan. And I was wondering of anybody with the time might check out the above two links and share your thoughts about how they're going about this?

The main reason I ask is because barely a month goes by without some client, friend, or relative asking me what I think about their latest brainstorm; and how Kickstarter might help make it real. (I have a new one somebody threw at me just this weekend. Hate to say I think this one is even more hopeless than most. Which saddens me because the people involved have already spent some of their own money to start moving on it )

I have strong and (to my mind) well considered opinions about start-ups and running a business. And I have even stronger thoughts about how to do crowdfunding and crowdsourcing. Which means it's quite possible I have my head firmly up my ass about a lot of things like this. Especially since I date back to a time before online business anything existed - and I still can't see the web as the magic wand that some do.

Rather than influence whoever cares to join in this discussion, I'll hold off listing what I see as the major problems with this particular campaign. At least for the moment.

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[superboyac]

I have strong and (to my mind) well considered opinions about start-ups and running a business. And I have even stronger thoughts about how to do crowdfunding and crowdsourcing. Which means it's quite possible I have my head firmly up my ass about a lot of things like this. Especially since I date back to a time before online business anything existed - and I still can't see the web as the magic wand that some do.

Possible...but HIGHLY unlikely.  If it turns out that you have your head up your ass on such things, I'm just going to shoot myself now.  I'll check it out and see if I have any thoughts.  BTW, thanks for helping me with my startup! 

[TaoPhoenix]

The endgame of this question is too hard for me! I can only offer a few random lilly pads across the pond of the problem but someone else will have to make a few big leaps!

It "seems all right" on the first and second reads. If the owner wants to sell and let's presume he's not asking something ridiculous in that 500k figure, fine, he sells.

My alert signal is going off with something to do with "$500k ... or what?"
A. "Shut it down?"
B. "Or sell it to a Big Evil Interest?"

Because the first un-stated item is why they're wrestling with going all "non-profit" now, when why not just do it with the current owner? Why does *he* get to cash out, on *our money*? Why not just walk and say "here's the keys and two beers are in the fridge"?

Well, if an owner wants $$$ or "he'll shut the site down" has been popping up a little here and there, truly the "I'm taking my ball and going home".

Or then there are Big Evil Interests looking at buying these "strange little properties". My best analogy is Dice Holdings (of job ad listing infamy) buying Slashdot. After a few months when everyone had to move in etc, now they're regularly posting "their own stories" in the middle of the normal ones, with varying levels of transparencies to the point a couple of us made sure to squawk about the mixed signals. So there really *are* things that happen when "properties" "sell out to the Death Star".

So that's all I got to get y'all started!

[wraith808]

Crowdfunding in my opinion should be for a tangible goal that is of benefit and interest to all involved.  There is a reason that this is on IndieGoGo instead of kickstarter.  (It is not a kickstarter other than the generic term that seems to be synonymous with crowdfunding these days). 

Everything on Kickstarter must be a project.

A project is something with a clear end, like making an album, a film, or a new game. A project will eventually be completed, and something will be produced as a result.

This isn't a project, and nothing definitive that is not already in production will be produced.  It fails on this count.

Kickstarter cannot be used to raise money for causes, whether it's the Red Cross or a scholarship, or for "fund my life" projects, like tuition or bills.

This is closer to a cause than not, in my estimation.

Kickstarter cannot be used to sell equity or solicit loans.

This is basically what this is doing if it doesn't make the full 500k to purchase outright.

Kickstarter cannot be used to fund e-commerce, business, and social networking websites or apps.

Fails on this one too from the campaign page.

(all taken from http://www.kickstarter.com/help/guidelines)

Now, taking that off the table and looking at what it is:

- the end goals (other than to purchase a website that is for-profit) is not defined.
- the campaign and the representation of those involved is a bit sketchy.
- the perks are not anything of note ("Due to the nature of this campaign, the cost of the perk tier must exceed the cost of the perk item or it is actually a drain on the campaign. Because of this, perks that we can provide are limited.") and so this is purely a donation.
- Did I mention that the whole thing is pretty half-baked?

Kickstarter is a tool to bring the market together with ideas that would otherwise not get funded or would be prohibitively controlled in that funding.  It is not a magic bullet, it is not a get-rich-scheme.  Prospectus' should be more planned out than normal in my opinion, and people should be more discerning than they would be if giving larger amounts of money to an investment opportunity, because there is more opportunity for fraud and failure, not less... and less opportunity to reclaim said funds.

[40hz]

@Wraith/Tao - Yeah on all points.

My biggest issues with the campaign(s) are:

1. Why is it so essential that the entire thing be free and clear of all encumbrances with the original owner? If said person offered to offer finance terms for the buyout like he did, why not solicit for the original down payment of $300k - and make the balance a stretch goal?

2. I'm suspicious of requests for funding without a budget or financial plan to go along with it. What exactly is it that will require so much money? I'm guessing the bulk will go into salaries in the absence of anything but hand waving and promises of "mo' better and much" down the road. Exactly what will this be used for. Breakout of capital plan and operating budget please?

3. Who is going to own this when/if this is ever funded. Because right now it looks like somebody is asking me to help them buy an established (and already money making) business that the campaign's recipients will apparently own for themselves. That's almost like them saying: W want to buy an exclusive royalty free franchise - and could somebody please buy and give it to us. please?

(Note: which is about all they can do with this since you can't do a public offering through Kickstarter. The SEC has had issued some very strong 'advisories' to crowdfunders who are planning on selling anything resembling equity shares in a business. The short summary is: Don't. It's a violation of law.)

4. Guarantees please? Even assuming people are willing to buy the Hackaday editors their jobs back (which is what this campaign amounts to) what guarantees will they make that they won't just ride the pony for six months - and then sell it to somebody else after they've ramped it up a bit as promised?

I've seen it happen far too often where some altruistic business owner sells his baby (at a reduced price)  to a group of his employees only to see them promptly turn around and sell out to the company he originally turned down. And almost always for the same or more cash than the former owner was originally offered.

5. Why instill doubt when there's already doubt aplenty? Don't know about you, but anybody who's that down in the mouth about their own prospects doesn't instill much confidence in me. Never complain - and above all never ever diss your own proposal.

If you say you're not very optimistic about succeeding with what you want to do, I'm usually walking away before you stop crying in the beer I just bought you. I will work with somebody. I will help or advise somebody. I will invest in something. Or buy it. But I won't provide psychological treatment for phobias or neuroses, hear confession, or do self-esteem training sessions. I lack both the interest and the qualifications. And there are many licensed professionals who already handle that sort of thing anyway.

Those are the initial red flags that popped up after my first read through.

Combined, my gut tells me these people haven't much of a clue about how to run their business. Probably because they've been employees most of their lives and assume (erroneously) that knowing how to produce the work automatically provides all the background needed for running the actual operation.

It's a common misconception. As many managerialpostmortems conducted on business failures will show. (Note: the two leading causes of business failures are (1) insufficient sales; and (2) insufficient managerial experience running the business in question.)

[40hz]

BTW, thanks for helping me with my startup!

@ SB - Thanks for the kind words. But you overestimate whatever help I may have given. You did your homework extremely well and had all the pieces of your plan in place. I was just the sounding board.

The thing that impressed me most was that you actually went out and did it. That put you in that very small minority group who prefers to actually do something rather than just dream about doing it.

Starting and running a real business is a mind altering experience - as we discussed. (Oh my yes!) And now you know this to be true from your own direct experience. Pass it on!  

[superboyac]

BTW, thanks for helping me with my startup!

@ SB - Thanks for the kind words. But you overestimate whatever help I may have given. You did your homework extremely well and had all the pieces of your plan in place. I was just the sounding board.

The thing that impressed me most was that you actually went out and did it. That put you in that very small minority group who prefers to actually do something rather than just dream about doing it.

Starting and running a real business is a mind altering experience - as we discussed. (Oh my yes!) And now you know this to be true from your own direct experience. Pass it on! 

I still remember the quote you told me about a mirror of yourself (forgot the wording), but it was exactly true.  I learned more about myself the last 3 years than possibly any period before.  What an experience, holy cow!  Can't say I'd be able to do THAT again.  But I will do some other things, and I think they will be good (fingers crossed).  I'm trying to do something more fun this time, along the lines of music or cartoons, and this time I'd like to work with less focus on the profits and more on just doing quality work, with energetic people, skilled people.  Not that it's going to be volunteer work, it must make financial sense one way or the other.  but one of the weird (almost mysterious) lessons I've learned through this whole process is that focusing on the money doesn't work well, and focusing only on the artistic (or perfectionist, control freak, etc.) also doesn't work well.  There's a strange balance in between that is just right, and I've gotten a really good feel for that.  I just don't know how to describe it, and I understand now why other businessmen I've talked to had a hard time explaining it to me (and I always was pissed and accused them of being intentionally vague or misleading or dishonest).

By the way, let me explain...the business was a success in the sense that we captured between 10-20% of the market in less than a year.  A copycat customer of ours even started his own exact same business just 6 months later with an inferior product (no way that guy put in the same sweat I did  ).  It was NOT a success in the sense it didn't change any of our lives much, and it completely exhausted me.  But that was because we expected to capture 80-100% of the market (stooopid).  Great lesson learned there.  I'm very proud of the books, I can guarantee anyone out there it is by far the best material out there.  i would be shocked if someone went through those problems and explanations and didn't pass the test.  Some uber-critical folk who were hammering us on discussion forums about errors (that we fixed with one day turnarounds) and telling us that the books were shit, etc....they all passed.  Some of these guys are such intense studiers that they'll pass regardless of the material.  I also had a very satisfying moment when a coworker was telling me about these really great tutorial videos he saw online that helped him pass, and I'm like "those are mine!".

[TaoPhoenix]

Sure 40hz, and then if you put your "Black Hat" on, then even more things pop up.

What makes it all a pity is Hack-a-Day is fairly well respected, so that's part of the confusion. If this was a no-name we wouldn't even be caring right now.