Kickstarter Hardware Economics 101

Some time ago I wrote an article at EETimes about running a hardware Kickstarter campaign. Unfortunately, it seems that a lot of people misunderstood the article. This post addresses some of the comments made by various people.

Why are you blaming Kickstarter?

• I am not. The original title was “Kickstarter Hardware Economics”. The title was changed by the edtiors to “Why I won’t do another Kickstarter Campaign”. A fine title for sure, but it probably colored the message. The goal of the article was to shed light on the challenges of building hardware and to try to explain why Kickstarter may not be a good fit for most hardware projects.

Why did you price it so low?

• The reason we launched at $99 was to maximize exposure. We have plenty of data showing that with a more “reasonable” price (like $199), our campaign would have been dead in the water. The “$99 Supercomputer” was key to our broad adoption.

How could you miss the cost target by so much?

• We did meet our COGS targets of less than $100, this is clearly stated in the article. Any and all of losses were NRE related.  This may not be an issue if you are willing to consider engineering time as a free resource.

Why did’t you have a contingency plan?

• We did. Without a device in production no contingency planning will only get you so far. We launched the campaign with a evaluation board prototype and no production silicon. At such an early stage, the amount of uncertainty in COGS and engineering obstacles is very high.

Why did you launch without a ready product?

• We urgently needed to show traction as a startup or we wouldn’t be able to raise money from institutional investors. As a direct result of the Parallella Kickstarter campaign we were able to raise $3.5M. Without the Parallella Kickstarter success, Adapteva would likely have gone out of business.

Would you do it again?

• No

Andreas Olofsson is the founder of Adapteva and the creator of the Epiphany architecture and Parallella Kickstarted open source computing project. Follow Andreas on Twitter.