For some time now there has been this thing called “crowd sourcing” where a bunch of people who have some common interest work together to advance some big project. The stuff they work on is sometimes called “open source”. It’s an informal and organic way of doing things. People essentially volunteer their time and effort for a greater cause. One of the best examples is Linux and all the applications that run on Linux. Linux is free, no one owns it and thousands of people are working on it all the time.
A few years ago the Fed changed their investment rules that allowed regular people to invest in companies without stock or equity changing hands. A web site popped up called KICKSARTER. They wanted to provide a platform where a regular person could collect relatively small amounts of money from a bunch of people who wanted to see a project succeed. On the website, the entrepreneur would pitch his product, lay out what he hoped to accomplish, set a dollar goal and a fixed time frame for collecting the money. They would also come up with some incentives or bonus for contributors. So it might go something like this:
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I’m Bob and I want to create a Kimchi cookbook. I need $7000 to buy supplies and hire an assistant. I plan to release the cookbook by the end of this year. I have 30 days to collect my goal. If you send me $5 I will send you 5 recipes, $10-$20 10 recipes, and for $100+ a jar of my special hot Kimchi. |
Then the site keeps track of the amount of money pledged, the number of people who commit and the time left. If Bob does not get $7000 pledged in his 30 day time frame, no money or recipes change hands, this Kickstarter project will have failed. If he does get his $7000 (sometimes they beat their goal so he could get $10k) then Kickstarter gets 5% and Amazon (who handles the payments) get’s their 5%. Bob gets what’s left and gets to work. Hopefully Bob makes his cookbook, sends out bonus recipes and special hot Kimchi and everyone is happy. ALTHOUGH if Bob decides to go to Las Vegas and try to double his money there isn’t much anyone can do about it. There are no guarantees and Bob doesn’t legally have to give you anything.
Why then, you ask, would anyone give Bob any money? There are several possibilities;
1. In the Kimchi cabal, Bob is the Zen master, to have just one of his recipes for $5 or to be guaranteed a taste of his special hot would be worth it, this may be the only way to get a jar
2. You love Kimchi and have yet to find a decent cookbook, this is your chance to help spread the Kimchi love out there
3. You yourself are a frustrated chef, years ago you desperately wanted to write a Brussels Sprout cookbook but no one would listen
, you won’t let that happen to Kimchi Bob
But I think mainly people want to be a part of something. They want to be able to tell their friends they are part of the Kimchi community. It gives them the feeling of being able to make something happen that matters or at least would be cool.
So why am I writing about it now? Well, I think it’s hitting the mainstream. Projects are raising millions of dollars from people like us. Other people like us are getting a chance to work on something they are passionate about that they might not have had before. About 42% of the projects are successful. The Kimchi cookbook is not my idea, there is actually a guy out there trying to make this happen. One of the biggest projects out there is called OUYA – it’s a game console machine, it’s cool, check it out. I have another idea, I was just getting you used to the concept. Maybe you have an idea too?