Tabletop creators are trapped in a boom and bust crowdfunding cycle

Even before the COVID-19 pandemic hit, Wyrmwood Gaming’s YouTube series was Wilm Life, provided the Internet with insider information about how woodworking companies operate. Fans got to ride with him when he launched a record-breaking campaign for his table of affordable modular games in 2020. They’ve also been there with the growing company’s labor issues, internal conflicts, and disagreements over how to grow. But in the last few months, a bigger problem has become apparent. Wyrmwood, like many of his tabletop creators, feels trapped by the very tool that helped make it happen: crowdfunding.

Wyrmwood’s latest Kickstarter campaign for modular standing desks ended in disaster in October. He needed $3 million from backers for the project to be fully funded, a condition that bothered some consumers. The initial buy-in is set at $3,000, which is almost double the cost of the lowest priced desk in the line. The goal was to stabilize the company’s production pipeline by limiting demand to wealthy consumers only. By setting the number of desks to produce, he could easily keep his 200 US-based employees employed while encouraging Kickstarter backers to upgrade their purchases at some point in the future. I can do it.

But while big consumers were queuing up quickly, and the campaign exceeded $2.5 million in just a few days, consumers without funds (and international customers) simply couldn’t participate. Just a few days into the campaign, the ticker actually started going backwards. The project was eventually canceled by him on October 27, falling short of his target by nearly $800,000.

On YouTube, I could see the team reacting to the situation in real time.was Nervous cell phone calls and drunkenness for performance when they get serious in the conference room.in another scene you can see Kickstarter’s Newly Appointed Game Director He’s on hand to oversee his company’s support of high-profile campaigns, and is always on the lookout for something to do. case of champagne I sat at a closed boardroom table while company management licked my wounds with pizza. Wilmwood likely lost a lot of money just developing the samples and taking the pictures, and for several months had been under pressure to cut staff as a cost-cutting option.The option to purchase a desk has since been added to the website as a pre-order.

why does it have to be this way? Wyrmwood has been in business since 2015, but like many others in the board and role-playing games industry, he returns to Kickstarter at least four times a year whenever he releases a new product. . A few days before the campaign was launched, his director of marketing for Wyrmwood, Bobby Downey, was on the phone and he told me why. The company needed capital on favorable terms like those obtained through crowdfunding to keep the company moving forward.

Illustrated by: James Bareham/Polygon

“Kickstarter is great,” Downey said. Hopefully, we will get out of the chaos and start functioning like a normal company.

“We call it ‘Kickstarter Crack,'” Downey said. “That’s how we happen, isn’t it? [It’s] You need it, but you can’t stay there forever. ”

Founder William Michael Cunningham creative investment research author with The JOBS Act: A Crowdfunding Guide for Small Businesses and Startups, says crowdfunding, while still relatively new on the global stage, is gaining ground in the market. was not intended to be The bottom line is that the last 30 years of US economic policy have failed small businesses. So do banks.

“Remember, in the 1950s and ’60s, it was the place to go to the bank for something like startup funding,” says Cunningham, a University of Chicago-trained economist who said Polygon said in a recent interview. “Restaurant. Barbershop. Anything. [Now] They, especially the big banks, are completely out of the business. ”

Consolidation has reduced the number of banks overall, especially community banks and savings loans. The remaining embankments are larger, with more reserves and bigger fish to fry.

“If this trend were to continue in a straight line by 2040, the country would only have two banks,” said Cunningham. “This is a failure of banking policy. Everyone went crazy in his 1980s, ‘Greed is good. Investment banking, good. Goldman Sachs, Lehman Brothers and all those little things.’ They fail to recognize the social benefits that small, family-owned banks bring to their communities and the innovation economy.”

Cunningham says banks should ride white stallions to save successful manufacturers like Wilmwood todaybut they’re too busy looking for the next opportunity to float most of the $44 billion needed for Elon Musk to buy Twitter.

“If they had any sense, they wouldn’t, they would step in and be saviors here,” Cunningham said. Stick it all over, they don’t do it because they’re selfish, greedy, and focused only on short-term money, but they should.”

Another traditional source of local capital is credit unions. This is a hyper-local source of reinvestment for close-knit communities. However, especially in the last 20 years or so, that number has been declining as many banks have closed or been swallowed up by the big banks.

“Every sector has been driven by this unfair profit maximization theory,” Cunningham said. […] Assuming it operates reasonably, this is the kind of organization that can receive financial support. ”

However, they are unable to do so, and the situation is unlikely to change anytime soon.Wilmwood’s next option? venture capital. You can watch Wyrmwood co-founder Doug Costello come up with ideas. — on YouTube videosHis other co-owners sound intimidated, and according to Cunningham they absolutely should.

“Venture capital models don’t work [at this scale]Cunningham said, “Because we’re too focused on making a profit. These guys want 100% returns and all this crazy stuff.”

That’s what Cunningham said, or shark tankIronically, it’s one of the last places Geek Chic, the iconic maker of geek furniture that went bankrupt in 2017, turned to when facing financial trouble.

So how do creators break their dependence on crowdfunding?

“What we need to focus on is establishing a high-quality, solid product. This is because it is limited to cases where it is offered even at such a price.”

When those products come to fruition, businesses sell them year after year, connecting with their biggest fans in a direct and authentic way. Don’t abuse the hype cycle to get a massive influx of cash ready for the next one. Unfortunately, a fast-growing company like Wyrmwood may need him fewer than 200 employees to do just that.

Crowdfunding is a great tool for bringing unique projects to life. As such, Kickstarter has spawned many capable competitors like his Gamefound and Backerkit. The two platforms originally grew around providing crowdfunding products to their backers. Tabletop games and video games in particular have found a place in this economic niche, and the creator is funded solely by his Kickstarter. Over $1 billion in games category since 2009But perusing the latest new board games and tabletop gadgets feels like hopping on a treadmill, especially in the last few years of the pandemic. Campaigns that encourage you to pay before the opportunity is over will eventually come to an end…and will soon be picked up again as long-running pre-orders on other platforms. It’s a multi-platform hype Ouroboros that eats you up and exhausts you.

I found that to be a terrible way of running a business as well.