Switched On: Higher stakes, higher ground for crowdfunding, part 2

Each week Ross Rubin contributes Switched On, a column about consumer technology.

DNP Switched On Higher stakes, higher ground for crowdfunding, part 2

Last week's Switched On discussed the issues around crowdfunding liability, offering examples of some recent tech projects that delivered late or inconsistently, and explaining the justification for sites such as Kickstarter and Indiegogo denying accountability. Given this, there are a few options in how consumers choose to engage with crowdfunding sites.

One option, of course, is to accept their positioning. Understand that, when you pledge funds with the promise of a reward that may include the product you are backing, you are assuming risk. All Kickstarter project pages must now include a section that describes some of the risk factors in bringing the project to market although these descriptions fluctuate in how forthcoming they are. Project backers vary widely in their experience and all projects have some risk of not coming to market.

A second option is, if not avoiding crowdfunding sites altogether, at least waiting until the products they've spawned hit channels where there is more accountability. Crowdfunding sites have been fertile grounds for incubating new categories such as smartwatches (and overly fertile grounds for things such as minimalist wallets). As these products become available to the broader public after the initial backers, you may be able to purchase from a party that will offer you a refund if a product arrives late or not at all. Once products are offered via web sites of physical locations that consider themselves stores -- or even an eBay storefront or auction -- there may be more recourse.

One crowdfunding site is directly taking on the onus of consumer protection, in large part by focusing on the feasibility of -- and note this word -- inventions. Christie Street was borne of frustration when the founders' Kickstarter project, a charging station for iPhones and other gadgets called Pop, was coming to market just as Apple was transitioning to the Lightning connector. The project owners thought they might need to find a way to give the money back and found there was no easy way to do so through Kickstarter. (Pop wound up moving forward as designed and is now available for pre-order.)

DNP Switched On Higher stakes, higher ground for crowdfunding, part 2

Founder James Siminoff describes Christie Street as a store, but one that does not sell pre-made products. Products sold through Christie Street go through a rigorous technical analysis to determine if they can be made at all, and for how much. Christie Street will not allow a product that needs $250,000 in funding to float a $50,000 campaign. Addressing Kickstarter's assertion that the goal of the crowdfunding site is to allow backers to assess risk, Siminoff notes, "My mom is one of the people buying it. She doesn't understand if it can be made or not. The crowd can't determine that."

And that's just the beginning. Funds collected are dispersed to the inventors from an escrow account and are generally paid out a third at a time as certain milestones are reached. Factories are screened to make sure there are no child-labor abuses. But despite all the oversight, Christie Street has few rules about the kinds of inventions it will accept. Unlike with Kickstarter, household items are allowed. About the only two restrictions are food and firearms. The site will even allow consumers to purchase "insurance" on the product they're backing, which will ensure a refund even if things go wrong despite all the protective measures.

Crowd Supply is another site that combines, but also draws distinctions among crowdfunding, pre-orders and sales, allowing more cautious early adopters to cancel pre-orders if they don't like the direction a product is taking. Like Christie Street, it has few rules about the kinds of products it will accept; co-founder Lou Doctor calls it, "Kickstarter for capitalists," and agrees with Siminoff that crowdfunding for technical products entails different requirements versus artistic products: "It's like oil and water, red states and blue states. They just don't mix." Crowd Supply also helps product creators bring their ideas to market by working with a network of rated service providers and sets expectations about delivery by adjusting delivery dates depending on when pre-orders come in.

Crowd Supply currently has about 12 projects on its site, including an artistic food magazine. Many are in early funding stages although a couple are shipping. At Christie Street, without Kickstarter's traffic and resulting network effect, projects have had a mixed record out of the gate. Siminoff's own project, DoorBot, reached its goal, but only after the team kicked in money to get it over the hump. The one open project currently on the site, an earphone cord organizer called Kordl, has attracted less than $1,000 of the $25,000 sought with about two weeks to go in the campaign.

At CES, Christie Street and established accessory maker TYLT showed off a backpack called Energi with integrated gadget-battery charging. However, that product is now seeking consumer contributions on Kickstarter where it's closing in on its $50,000 goal. There don't seem to be any hard feelings on Siminoff's part; he's a backer.

Ross Rubin is principal analyst at Reticle Research, a research and advisory firm focusing on consumer technology adoption. He shares commentary at Techspressive and on Twitter at @rossrubin.